SCA: Bankrupt in 2 months

Security Capital Assurance Ltd. (SCA),5th largest subprime insuer. Imagine a leaf blew into a bank and they gave it a 30 year Ajustable Rate Mortgage (ARM),well these are the type of risky loans Security Capital were insuring.The reason I used the past tense were,is because I do not see this company around in two months. The bond insurers are paying a price for expanding beyond municipal bonds to guaranteeing debt backed by subprime mortgages and home equity lines of credit as well as CDOs that contain asset-backed debt. Record forclosurers and defaults on the subprime debt contained in the bonds sparked losses that have spread throughout the credit markets, forcing the writedowns by banks. The collapse of the U.S. subprime mortgage market has led to about $76 billion of losses at securities firms and banks this year. Subprime loans are made to people with poor credit. The bond insurers have been under scrutiny by Moody's, Standard & Poor's and Fitch Ratings for the past month after declines in the credit quality of the securities they guarantee raised concerns they may need more capital to assure there AAA ratings. Security Capital Assurance Ltd. was given six weeks to come up with $2 billion more in capital by Fitch Ratings or face losing its AAA rating.SCA portfolio is ``highly sensitive'' to rising losses in residential mortgage-backed securities from the past two years.The company has insured $154.2 billion of securities, of which 46 percent is structured finance securities, including $16.1 billion of CDO backed by subprime mortgages and $1.9 billion of subprime mortgage backed securities. I believe the chances of ACA coming up with $2 billion in this type of finacial enviroment are slim.Banks are not going to lend out any capital to a struggling company that has one foot financialy in the grave,later after Fitch warning of a downgrade, Paul S. Giordano, SCA's president and chief executive officer commented: "While we are disappointed with Fitch's decision today, we have a plan to address their additional capital requirements. Our plan involves a range of options for increasing our capital position within the time period indicated by Fitch." There can be no assurance that SCA's "plan" will successfully address Fitch's capital requirements within the timeframe.I have zero confidence that they could even come up with $15 million! let alone $2 billion,I bet they could do another $2 billion in losses next quarter! In summary capital is going to be hard to come buy for (SCA).Right now Banks are not willing to lend to each other because they know what they have on there books are bad and are going to assume the other guy has to be doing even worst.Lending Institutions are having enough trouble with storing,and coming up with new capital of there own.Citi had desperately needed an cash infusion of there own,we can safely rule out (C) loaning them $2 billion.Banc of America ironicly invested $2 billion in Country Wide Financial and has already lost $1 billion on there initial investment,we can rule out Banc of America loaning them money.Were is SCA going to come up with the cash in six weeks?How about XL Capital Ltd.former owner of Security Capital Assurance.If anyone was going to lend the cash surely it would be the former parent company,would it?XL still maintanes a 46% stake in the company and XL Chief Executive Brian O'Hara kept a board seat,but O'Hara said last month that he was leaving Security Capital's board, sparking speculation that XL could inject new capital into the bond insurer.Im no Rocket Scientist but when the CEO of the parent company leavs the board after allready losing $6.6 billion on SCA's securities,and having there 46% stake in the company of $670 million decline to 160 million,why would they want to give them the cash? I read in a book that Eagles,after a certain period of time will kick the chick out of the nest to fly,I hope SCA has wings,unless look out below.