by Calculated Risk on 12/20/2007 10:27:00 AM

Update: Housing Wire has more news stories, and recommends this Nomura piece to understand CDOs squared.

From Bloomberg: MBIA Bond Risk Soars on $8.1 Billion CDO Disclosure

MBIA Inc. tumbled ... after the world's biggest bond insurer revealed that it guarantees $8.1 billion of collateralized debt obligations repackaging other CDOs and securities linked to subprime mortgages.
...
MBIA posted a document on its Web site late yesterday showing it insured the so-called CDOs-squared, a potentially riskier form of security than what the company typically guarantees. Rising defaults on subprime mortgages packaged into securities have led to bond downgrades and threatened MBIA's AAA guaranty rating.

``We are shocked management withheld this information for as long as it did,'' Ken Zerbe, an analyst with Morgan Stanley in New York, wrote in a report yesterday. ``MBIA simply did not disclose arguably the riskiest parts of its CDO portfolio to investors.''