The Oracle of Omaha has put away his cape and tights. Warren Buffett had recently offered to rescue a few very distressed lenders by backing a bunch of loans, but now the would-be hero has withdrawn the deal.
On Monday, Buffett said on television that his offer to guarantee $800 million in municipal bonds backed by MBIA (nyse: MBI - news - people ), Ambac Financial (nyse: ABK - news - people ) and privately owned Financial Guaranty Insurance, is no longer "on the table." (See "Billionaires Pounce On Bond Insurers Stumble") Although his offer seemed like a much better deal for Buffett than the insurers, shares of the troubled companies weakened after he withdrew it. MBIA was down 37 cents, or 2.6%, to $12.60, during morning trading in New York. Ambac fell 34 cents, or 3.05%, $10.80.
The trifecta of woe-ridden bond companies have been weathering hard times that don't seem near ending. (See "MBIA, We Hardly Knew Ye") and "Bond Insurers Led Into Temptation".) Along with a few near-miss billionaire bail-outs, regulators have also attempted to help the bond industry heal itself. There was recently a movement towards making bond companies divide their portfolios into "good debt" and bad debt." (See "Splitting Bond Insurers Is Hard To Do")
The legendary investor also said on the show that America is essentially in a recession. Buffett said that he hopes his next big investment will be overseas. CNBC's morning Squawkbox program featured several hours of the 78-year-old Buffett. Former General Electric (nyse: GE - news - people ) Chief Executive Jack Welch contacted producers to say that it was best Squawkbox, ever. General Electric owns CNBC, and for many years the hard-driving Welch was therefore the networks ultimate boss.
On Feb 12, Buffett had offered to guarantee the bonds, but only with a hefty premium. The offer did not include risky debt, including securities tied to subprime mortgages. Buffett's Berkshire Hathaway (nyse: BRKA - news - people ) launched its own bond insurer, Berkshire Hathaway Assurance, in December. (See "Buffett's Insurance Bust")
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