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/ 83.27.153.* / 2008-02-12 15:04
Buffett Offers to Assume Muni Liabilities of Insurers (Update1)
By Emma Moody
Feb. 12 (Bloomberg) -- Warren Buffett, the billionaire investor, said he offered to reinsure $800 billion of municipal liabilities of MBIA Inc., Ambac Financial Group Inc. and FGIC Corp.
One company turned down the offer and the two others haven't responded, Buffett, chairman of Berkshire Hathaway Inc., told CNBC television. Buffett said the proposal doesn't include the subprime-mortgage related securities that caused more than $5 billion in losses last quarter.
``It would solve it in one stroke of a pen,'' Buffett said. ``Our proposal puts the municipals at the front of the line.''
Berkshire would put up $5 billion as part of the plan, Buffett said.
The bond insurers lend their AAA rating to $1.2 trillion of municipal debt, the rankings of which would be thrown into doubt if they were downgraded.
If the debt was reinsured by AAA rated Omaha, Nebraska- based Berkshire, the municipalities would also retain the top rating, Buffett said.