Money Rehab with Nicole Lapin · Monday, September 28, 2026
Nicole Lapin details Bill Ackman's successful short bet against MBIA in 2002, predicting the 2008 financial crisis. Ackman shorted the company's stock and bought credit default swaps, correctly identifying MBIA's AAA rating as 'fantasy' due to its practice of insuring other companies' debt. His report, 'Is MBIA AAA?', initially dismissed, ultimately led to a $1.4 billion profit when MBIA collapsed.
“Back in 2002, Bill zeroed in on a company called MBIA. If you've never heard of it, that's kind of the point. MBIA was a bond issuer, one of those really boring behind the scenes companies. The problem with MBIA was that it slapped its AAA rating on other people's debt to make it look safer. Bill looked under the hood and decided that AAA rating was basically fantasy.”
“First, he shorted the stock, and then he bought credit default swaps. Think of credit default swaps like insurance that pays out if the company blows up. Then he published a terror down called is MBIA AAA, laying out exactly why he thought the whole thing was a house of cards.”
“All right, fast forward to 2008, and Bill was right. MBIA cratered, and Bill finished closing out the trade in 2009 for about $1.4 billion, on a bet that cost him around $64 million, I will say, to put up.”