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To: KyrosL who wrote (46649)	7/21/2002 11:53:06 PM
From: patron_anejo_por_favor	Respond to of 209892

I believe it's very widespread, particularly in short-term debt instruments. MBI started in Muni Bond insurance, but over the last 4 years or so they've become more of a jack of all trades. The majority (I believe 70-80%) of their revenues now comes from commercial credit insurance, no doubt aided and abetted by the trend toward packaging asset-backed securities. If they go south, it would affect Fannie much LESS than other entities, particularly credit card seller, the CP and CDO markets and corporate debt. So we'll see. What I'm not clear on is they're exposure to WCOM and lenders TO them, we should find out in the "fullness of time", as it were... You are correct that WCOM defaults have been known about for awhile...remember that BK is a bit of a different kettle, in that lenders MUST disclose and mark to market their loans to them as soon as BK occurs. Remember Enron? No more hiding that crap in bloated balance sheets. Once disclosed, debt gets downgraded, lenders start getting distressed and defaults accelerate, which is where MBI's problems start to mount. As a side issue, the cost of capital to businesses rises, just when a number of companies (GE for one) has been trying to float tons of long term debt to avoid credit downgrades from overreliance on CP and the like.