White Meat Dark Meat

One of the two guys who taught me the venture business was Bliss McCrum. He is the king of the cliche. One of my favorites of his was "they get the white meat and we get the dark meat". You see that all the time in the investment business. When there is something good mixed in with something bad, you always look to split them up.

I thought of Bliss and his cliche this morning when I saw this news from FGIC

Financial Guaranty Insurance Co., a major bond
insurer, has notified the New York State Insurance Department that it
will request to be split into two companies, according to a person
familiar with the matter.

One of the firms would likely retain much of the
business of insuring structured finance bonds such as those backed by
mortgages, which have come under severe pressure due to the housing
market slowdown, according to the person.

The other company would likely retain most of the municipal bond insurance business, which is stronger, the person said.

This certainly seems like a good idea and puts a firewall between the problems in the mortgage business and the muni bond business which has historically had very low default rates and has traditionally been a safe haven.