MBIA CEO: Market Liquidity Could Sort Out By Year End

Apr.21, 2008 in Market Outlook

WASHINGTON (Dow Jones)–The global liquidity crisis could begin to resolve itself
over the next six to nine months but continued market turmoil will likely result
in a “bumpy” year, MBIA Inc. (MBI) Chairman and Chief Executive Joseph Brown said
Monday.

Speaking at Georgetown University in Washington, Brown said the current housing
crisis could stretch longer, not reaching a bottom for another one or two years.

“The mortgage crisis is not going to get resolved this year,” Brown said.

This will have various implications for both bond insurers such as MBIA as well
as for the broader financial markets, he said. The importance of larger banks
will grow, more transparency will be required from the rating agencies, and
broader disclosures about securities will be mandated throughout the financial
services industry, he said.

For bond insurers, the changes will also be significant, Brown predicted. He said
he expects the number of bond insurance companies to contract as the markets they
serve - particularly for structured finance products - get smaller.

“I don’t think structured finance is going away … but we do think it will look
different, taste different,” Brown said, including more standardization of
products.

Brown said it is likely to be a “bumpy” year for MBIA, but that the bond insurer
will be able to withstand the stresses caused by the financial market turmoil. He
said he was particularly optimistic about the company’s public-finance business,
which he predicted would “continue to prosper in the years ahead.”

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