Submitted by Lenny, Jan 31, 2008 14:12

If bond insurane companies are downgraded by rating agencies (S&P, Moody's and others), investors who own municipal bonds, especially mutual funds, and those who invested in muni's for retirement or as a safe investment, will realize their insured bonds will be devalued or worth less then currently value. The financial crisis could get worse, if further downgrades are forth coming. The severity of the problem linked to how bad the real estate devaluation continues or worsens.

Certainly the bond insurance companies could use an infusion of capital. Doubtful if the Federal Government will come to the rescue of these bond insurance companies. Bond insurance companies created this problem for themselves by over leveraging their investments.

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