Marty I gotta say this. No one has really covered this part of the financial meltdown as you have. You know what I would love to see - A full article on the issue, along with covering the "reforms" the Bush administration is proposing.

Marty,    I’m not sure how much more candid I could have been with the Wall Street Journal than a straight Q-and-A interview.  If you think that’s “bullying” I can’t imagine what you would say if I had declined comment altogether.  

But what’s also puzzling is the omission that you have been both a major stakeholder and an advisor to Pershing Square, a hedge fund that has led a short-selling position against our company.  In other words, you profit when MBIA suffers and you have a financial interest in spreading doubt about our strength.  

Although you have mentioned this conflict of interest in the past, you have done so only occasionally and obliquely – and often not at all.  In more than a dozen commentaries on the topic over the last few years, you have explicitly mentioned your short position in MBIA only once – more than a year ago.  

What’s troubling about that, of course, is that readers cannot rely on the independence of your journalism.  It’s worse still since you are trying, indeed hoping, to influence readers in a direction that will benefit you financially.  

That is precisely why (along with every other serious news organization) the New York Times and the Wall Street Journal, both of whom you have criticized for their coverage on this topic, have explicit ethical guidelines on journalists holding financial positions.  The Times Ethics handbook prohibits the practice:

"No staff member may own stock or have any other financial

interest in a company, enterprise or industry that figures or

is likely to figure in coverage that he or she provides, edits,

packages or supervises regularly.

Masthead editors and other editors who play a principal part

in deciding the display of business and financial news, including

its display on Page 1, may not own stock in any company

(other than the New York Times Company)."

The Journal does too and also forbids holding short positions specifically:

"All Dow Jones employees are expected to conduct themselves at all times in a manner that leaves no grounds for belief, or even suspicion, that the creation or dissemination, or non-dissemination, of any news or other information was influenced by a desire to affect the price of any security.

No employee of Dow Jones may engage in short selling of securities."

It’s worth noting that my ownership in MBIA is fully disclosed and MBIA shareholders also have been given "say on pay" - they get to vote on my incentive plan.  

But even taking your points at face value, you've been betting that MBIA will "expire" since 2003, though as an investor of the now defunct Gotham Partners, it looks like that original bet didn't pay off so well. What's more, you've maintained your predictions about MBIA's solvency to this day - and your current bet is in doubt as well. That's because MBIA has a balance sheet that is among the strongest in the industry with over $17 billion in claims-paying resources.  Readers should know that we raised $2.65 billion of additional capital earlier this year - not to avert a solvency crisis, but in order to meet the significantly higher new stress-test requirements for maintaining our triple-A ratings, which were imposed on us by the rating agencies.

That rating is regarded by regulators as the surest guarantee that policyholders will be protected even under the most pessimistic and highly theoretical worst-case scenarios, and that MBIA would be able to pay every single claim and still stay in business.  Bottom line:  Bondholders of bonds insured by MBIA are getting paid in the event of a credit default, while owners of uninsured bonds bear the loss themselves.

Readers can learn more about the particulars at our website which posts several recent letters I've written to our owners.  But allow me to appeal for a little more guidance from you: How do you justify advancing your financial interests through the New Republic in a way that would, at any other serious publication, be a firing offense?  Presumably, the New Republic has different conflict of interest standards than the Times or Journal.  If so, why not post how much money you stand to gain should your campaign against MBIA succeed?  Surely your wide readership would be impressed to know that you are a high roller.  

Yours,  Jay Brown

MBIA

One very big story get very little coverage is the stock option scandal at UnitedHealthGroup. It's the largest financial scandal  in the history of American healthcare. It involves Donna Shalala, James Johnson, and other political heavy-hitters. Someone should track the dark history of James Johnson and Bill Clinton. A lot of funny stuff involving a lot of money. Mondale shows up in the UnitedHealthGroup scandal as well.

I don't think TNR has enough readers to impact the MBIA stock price, so it's not an issue. Although it's a brilliant magazine, statistically speaking it's just "noise."

It seems like Jay Brown's comments require a response.  Are his claims about your financial interests true?