Why Is MBIA Down So Big?

"MTM losses were substantially higher than expected. $342 million versus $175 million. The question was brought up as to why it marked to model, at a better rate, than what the Street was reporting for similar assets - management did not have a good answer."

Our read is: what really happened here is the wonderland looking-glass shattered and the market realized that, at ~$600 billion in mortgage securities "insured" with $7 billion in capital, the risk for MBIA is definitely to the downside.

The article doesn't mention it, but a relevant point in this analysis is that "subprime" securities are a canard; defaults are rising across the board, especially in "prime" ARM categories.