New York State Insurance Superintendent Eric Dinallo moved to quell speculation today about how fast regulators and banks might move and what action might be taken to bolster troubled bond insurers.

On Tuesday he said his department was talking with banks, insurers, financial advisors, credit rating agencies, other state regulators, government officials, and other stakeholders about developing measures to help stabilize the market and capital infusions.

One report out today suggested that a $15 billion bailout for bond insurers might be worked out within 48 hours in a meeting with bankers.

In reaction, Mr. Dinallo said he would not respond to "rumors," adding that "any effective plan will take some time to finalize" because the issues are complicated and a number of parties are involved.

However, he noted a need to act speedily. "We believe it is important that the goals of market stability, protection for policyholders and a healthy and competitive bond insurance market be realized in the near future," he said.

In his earlier statement, Mr. Dinallo said he is working on a three-point plan with the aim of attracting more capital, stabilizing the bond insurance market and strengthening its regulation.

His words followed a drumbeat of bad news for bond insurers notably MBIA Insurance Corp. and Ambac Assurance.

Last week, Fitch Ratings issued a financial strength downgrade of Ambac to "double-A" from "triple-A." Prior to that, Moody's Investors Service said it is reviewing the ratings of MBIA.

The superintendent said his department is monitoring major bond insurance companies and working to help stabilize the market, protect policyholders and assist in the continued availability of bond insurance.

His efforts, he said, involve daily conversations with federal regulators, the National Association of Insurance Commissioners and other state insurance regulators.

Mr. Dinallo, in his handling of insurance matters and the bond market, has already been proactive. Last year, in a move to secure more capital and increase capacity for municipal bond issuers, he contacted billionaire investor Warren Buffett, who heads Berkshire Hathaway, and invited the firm to open a new bond insurance company in New York.

He said he has moved "quickly" to approve a capital-raising plan MBIA is working on.

The department is currently drafting new regulations to redefine the future activities of bond insurers, "since it is clearly time to develop new rules for the road," said Mr. Dinallo.

Special Reports /

Word Of Bond Insurer Bailout Plan Premature: Says Dinallo

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