NEW YORK -
Fitch Ratings said late Wednesday it placed credit ratings on residential mortgage-backed securities backed by bond insurers MBIA, Ambac, Financial Guaranty and Security Capital on watch for possible downgrade.
Among those affected are 87 RMBSs insured by MBIA Inc. (nyse: MBE - news - people ), 64 by Ambac Financial Group (nyse: ABK - news - people ) Inc., 35 RMBSs insured by Financial Guaranty Insurance Co. and 19 backed by Security Capital Assurance Ltd. (nyse: SCA - news - people )
Last week, Fitch put the nation's two largest bond insurers, Ambac and MBIA, on warning that the insurers must raise fresh capital or face downgrades. The warning implies the firms' capital cushions aren't deep enough to support the companies if the credit markets continue to deteriorate.
The RMBS classes will remain on rating watch negative while Fitch assesses whether they offer investors enough guarantee of payment on their own, apart from relying on bond insurance.
Basically Fitch is saying the insurance is crap and the assets are probably crap. If one side of the deal, at least, doesn't pull it together it's all gonna come crashing down.
WHEEEEEEEEEEEEEEEEEE