Buffett offers to back bonds linked to insurers

Investor Warren Buffett today said he has approached troubled bond insurers MBIA Inc., Ambac Financial Group and FGIC Corp., partly owned by Blackstone Group, with an offer to back $800 million in municipal bonds. In a televised interview with cable channel CNBC, he said one of the three firms, which he did not name, has already rejected the offer while the two others have not responded. Mr. Buffett’s proposed backing is limited to the profitable municipal business of the monoline insurers, which insure primarily municipal bonds, and does not extend to the troubled CDOs that hurt the insurers’ balance sheets. He also said the backing of his firm, Berkshire Hathaway Inc., would ensure that municipal debt will not be downgraded as the result of the insurers’ woes.