Moody’s has said that MBIA is, “‘somewhat likely’ to face a shortage of capital that threatens its AAA credit rating.”

If their credit rating slips, then the bonds that they insure will have to be re-rated….House of cards.

The loss of MBIA’s top ranking would cast doubt over the ratings of $652 billion of state, municipal and structured finance bonds that the company guarantees. MBIA is among at least eight bond insurers seeking to ward off potential credit-rating downgrades by Moody’s, Fitch Ratings and Standard & Poor’s. The insurers guarantee $2.4 trillion of debt and downgrades could cause losses of $200 billion, according to Bloomberg data.