Hedge fund manager spooks Wall Street on bond insurer call

01/31/2008 | International Herald Tribune

A prominent hedge fund manager sent shock waves across Wall Street by warning that the bond insurance industry might suffer crippling losses. Pershing Square manager William Ackman has bet against the insurers' shares. He said MBIA and the Ambac Financial Group might lose $24 billion on the securitized mortgage investments they have guaranteed. A loss that large could set off a chain reaction of losses and raise borrowing costs for state and local governments.

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