At the root of the mess is how all the subprime credits have been structured. The complex securities all have a slice of "Insurance" that makes them prime.
The fear that is gripping Wall Street is that the key insurers are going down - this has the effect of taking all the category down.
Bond insurers could face more pressure today as the stock markets open. Just after midnight Thursday, MBIA reported that it lost $2.3 billion, or $18.61 a share in the fourth quarter, compared with profit of $181 million, or $1.32 a share in the quarter a year ago.
Together MBIA and Ambac guarantee more than $1 trillion in municipal, corporate and mortgage debt and carry a mark of distinction — a triple-A credit rating — a boast that even the most well-heeled of corporations like I.B.M. cannot make.
It's not over by a long shot