Buffett rides to rescue of bond insurers

Warren Buffett, the world's third richest person, has made an offer to three large municipal bond insurers to reinsure $800 billion in municipal bonds, effectively giving them a AAA credit rating. In an interview on CNBC television, Mr. Buffett said his Omaha, Neb.-based Berkshire Hathaway Inc. holding company made the offer to reinsure bond issuers Ambac Financial Group Inc. of New York, Armonk, N.Y.-based MBIA Inc. and New York-based Financial Guaranty Insurance Co. Each of those insurers is in danger of losing their AAA rating due to problems with subprime mortgages and other loans. Mr. Buffett said that the offer is designed to make Berkshire Hathaway money. Additionally, he is not offering to take on liability for riskier investments insured by the three companies, such as CDOs. Mr. Buffett said that he sent the offer to the bond insurers last week, and that he is giving them 30 days to find a better deal. He said one firm rejected his offer, and that he was still waiting to hear from the other two. However, Mr. Buffett did not say which company rejected the offer.