A preliminary estimate of possible upper range of [mortgage repurchase] loss could be up to $7B to $10B over existing accruals •It does not represent a probable loss •It is based on current assumptions and is necessarily subject to change •A significant portion of this possible range of loss relates to loans originated through Countrywide prior to our acquisition
It is good to see someone on the long side thinking about things. It looks like most have completely abandoned thinking and are now in a rabid frenzy or delusional fantasy.
The $7B to $10B is probably more like a realistic low end than a possible upper range. Even so, this is a drop in the bucket compared to the losses on loans that Countrywide, B of A, and Merril underwrote during the bubble years, probably around $250B. MBIA's rights are similar or worse than other parties that have taken these losses, so MBIA's share of ultimate recoveries should not be much greater than the overall average. If B of A ultimately needs to cough up $25B, that's 10 cents on the dollar, vs. the 30-40 cents that MBIA is accruing.
You will probably convince yourself that MBIA will recover a much higher percentage of loan losses than others. If so, please share your thinking.