Investment

MBIA Posts “Phantom Profit” as CDS Spreads Blow Up 

In another example of how often arcane accounting standards can obscure reality for everyday investors, besieged monoline insurer MBIA, Inc. [stock MBI][/stock] reported a surprise profit of $1.7 billion, or $7.14 per share, for the second quarter; but the profit was largely the result a $3.3 pre-tax paper gain tied to a substantial widening of credit default swap spreads on MBIA itself during the second quarter.