Financial Security Assurance (FSA) is a financial guaranty (or monoline) insurance company. In 2007, before the

2008 financial crisis 8 (eight) is the natural number following 7 and preceding 9. In mathematics 8 is: * a composite number, its proper divisors being , , and . It is twice 4 or four times 2. * a power of two, being 2 (two cubed), and is the first number of t ...

, FSA was ranked number four among global monoline credit insurers. FSA insured primarily

municipal bond A municipal bond, commonly known as a muni, is a Bond (finance), bond issued by state or local governments, or entities they create such as authorities and special districts. In the United States, interest income received by holders of municipal ...

asset-backed securities An asset-backed security (ABS) is a security whose income payments, and hence value, are derived from and collateralized (or "backed") by a specified pool of underlying assets. The pool of assets is typically a group of small and illiquid asset ...

and

mortgage-backed securities A mortgage-backed security (MBS) is a type of asset-backed security (an 'instrument') which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals (a government agency or investment ba ...

. Before insuring a municipal bond, monolines request a pledge of local tax revenues or revenues from essential public services such as municipal water charges. FSA was bought on 4 March 2000 for EUR€2.7 billion by the Franco-Belgian bank

Dexia Dexia N.V./S.A., or the Dexia Group, is a Franco-Belgian financial institution formed in 1996. At its peak in 2010, it had about 35,200 members of staff and a core shareholders' equity of €19.2 billion. In 2008, the bank entered severe ...

The subprime mortgage crisis

On 4 February 2008, Dexia announced that it was investing $500 million in FSA to "take advantage" of "increasing opportunities that have recently emerged" in the field of financing of US communities and public infrastructure. On 20 June 2008, the US hedge fund manager

Bill Ackman William Albert Ackman (born May 11, 1966) is an American billionaire investor and hedge fund manager. He is the founder and CEO of Pershing Square Capital Management, a hedge fund management company. His investment approach makes him an activis ...

announced publicly that he bet on an FSA bankruptcy. Four days later, 24 June 2008, Dexia provided FSA with a credit line of 5 billion euros with an initial term of 5 years but renewable "as needed." FSA posted for the first quarter of 2008 a $421.6 million net loss. This was due to impairment losses recorded on credit default swaps and losses on its portfolio of US mortgage bonds. On 21 July 2008, Moody's placed FSA's Aaa credit rating on review for possible downgrade. On 7 August 2008, Dexia announced that FSA would exit the activity of ABS and devote its resources to public sector finance. On 1 July 2009, the FSA group, excluding its structured finance liabilities, was sold to Assured Guaranty Corporation. Assured Guaranty changed FSA's name to Assured Guaranty Municipal Corp. in July 2009.

References

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External links

Site du rehausseur de credit FSA

Site de Dexia
Subprime mortgage crisis