MBIA

MBIA is trying to separate its public finance business from its structured finance portfolio, the home of its mortgage business.

MBIA sued Credit Suisse, alleging the bank fraudulently sold securities backed by loans that did not meet underwriting standards.

William Ackman, another hedge fund manager, has pursued a similarly zealous five-year campaign against MBIA, the bond insurer.

Consider a recent analysis of disclosures by Ambac and MBIA, two specialty insurance companies.

By 2006 MBIA had plunged into the much riskier business of guaranteeing collateralized debt obligations, or C. D. O. 's.

The decision puts more pressure on the banks to provide rescue financing for Ambac and MBIA.

MBIA was forced to reduce the value of its derivatives trades by $3. 6bn in the first quarter as credit markets tumbled.

Here is one: Why did you allow MBIA to keep its triple-A rating for so long?

Sentiment for specialist insurers such as MBIA and Ambac, which provide credit guarantees to lenders and investors, also deteriorated.

One recent trend is minority equity investments in public companies, such as Warburg Pincus' recent capital injection into MBIA.

It will then back a $500m rights issue which MBIA expects to complete early next year.

Mr Einhorn and Mr Ackman, for example, have both said they will donate any profits they make from shorting Allied and MBIA respectively.