Bad Paper

According to a Reuters article published on nytimes.com, the bond insurer FGIC has disclosed that its mortgage exposure exceeds legal risk limits. As a result, FGIC may need to raise $2 billion in equity. Rob Haines, a senior insurance analyst at CreditSights is quoted in the article as saying “This is a bombshell. They are actually in violation of New York insurance law. If they don’t remediate this, the state has the ability to take control of the company.”