MBIA replaces CEO
Leadership change reflects problems at the company due to subprime mortgages.
MBIA Inc. chairman Gary Dunton has resigned because of problems the subprime mortgage meltdown caused the company.
He is being replaced by former chief executive officer Joseph “Jay” Brown, company officials announced today. Mr. Brown returns to the Armonk, N.Y.-based bond insurer four years after leaving the company following an 18-year career and said in a statement that “MBIA faces meaningful challenges.”
The bond insurer reported $737 million in losses for the 2007 fourth quarter related to securities made up of high-quality residential home equity loans
Also, MBIA and Ambac Financial Group are being investigated by Massachusetts state regulators to see if they had informed cities and towns about their exposure to collateralized debt obligations
“The rapid deterioration in the US residential real estate market, combined with a near total collapse in global liquidity for structured financial products, have presented MBIA with the most serious challenges in its 34-year history,” said Mr. Brown in a Feb. 19 letter to company shareholders.
He will leave his current position as non-executive chairman of Seattle-based Safeco Corp. in May.
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