GREED & THE BOND INSURERS

They were making great returns on their municipal bond deals. According to Bloomberg,

During the past five years, MBIA's average profit margin was 39 percent, more than four times the average of the Standard & Poor's 500 Index, according to data compiled by Bloomberg. Ambac's average profit margin was 48 percent.

But they decided that wasn't enough and went for the CDO market. Why? MASSIVE RETURNS:

The siren call of CDOs was too strong for most insurers to resist. Virtually all of the securities were rated triple A and backing them required very little capital.

``This type of risk is thought to be one of the most profitable for the bond insurers,'' S&P said in a 2007 industry report.

Annual premiums on CDOs averaged 50 percent of the capital that the rating companies required the insurers to set aside, according to S&P. That compared with an average risk-adjusted profit ratio of 8 percent for insuring other types of structured-finance securities.