As I pointed out in my critique of MBIA's Letter to Owners, management has a little beef with the Fitch rating agency. Fitch is the only international rating agency that has shown some balls and credibility as of late. Yes, they passed out those AAA's like "Snickers" on Halloween in the past, but at least now they are trying to save face. That's a lot more than I can say for S&P and Moody's. The net effect is that S&P and Moody's have effectively watered down the moniker of AAA status to being just that, a moniker, without any real or tangible meaning behind it. The industry needs Fitch's harder (or should I say more realistic) stance, to actually lend any semblance of credibility to the term "AAA".

With that being said, MBIA is apparently expecting a downgrade from Fitch and has literally requested that Fitch not rate them any more. They would allow the rating of thier bonds, but not their claim's paying capacity. This is a major faux pas on behalf of management. By even trying to give Fitch the boot, they further water down the already quite diluted respectability of the other two agencies AAA ratings. Do you remember my comical skit on MBIA's valuation from Halloween last year? The cartoons truly exemplify the perception the (smarter end of the) market has on the ratings agencies. The article seems to have been right on point, if not overly conservative in terms of valuation as well, even if you didn't like my jokes (I don't know why you wouldn't like them, I'm actually rather funny). I've been short these guys for a while. Now, nobody in thier right minds will trust MBIA, S&P or Moody's. Do you guys think that your investors, clients and short sellers are stupid! Hey, we're a AAA risk because we won't hire anybody who'll say otherwise - Yeah, that'll work out just fine...

It is not as if the market had much confidence in the trio to begin with, forcing them to pay 14% super junk rates in a 7% environment for a (ahem) "AAA" risk. You guys at MBIA better hope you don't have to come back to the capital markets any time soon! Then again, this should be damn good for Fitch's buy side advisory business.