The Wall Street Journal on the Credit Crunch Flare-Up
The relative calm that has prevailed over credit markets since mid-March, when the Federal Reserve stepped in to help a fragile system, shows signs of dissipating.
The latest example: Moody’s Investors Service Wednesday threatened again to lower the top triple-A ratings of MBIA Inc. and Ambac Financial Group Inc. because the bond insurers are having difficulty getting new business while losses mount on mortgage securities they insured.
Potential downgrades from Moody’s place renewed pressure on MBIA and Ambac to raise additional capital, and also increase the risk of additional losses for banks and investors who bought insurance on mortgage securities.