Less than 48 hours after it was specifically named as a target of a state investigation of major bond rating agencies and insurers, MBIA announced a record quarterly loss after writing down $3.5 billion.

MBIA, a major bond insurer, said it was looking at ways to raise additional capital but the loss was wider than analysts had expected.

The company whose stock in trade had for years been the insuring of municipal bonds had seen an opportunity of increasing its revenues by insuring packages of subprime mortgages and other consumer debt. Now it is reporting a fourth-quarter loss of $2.3 billion or $18.61 a share, mostly from that ill-conceived decision. One year ago it reported a fourth-quarter profit of $181 million or $1.32 a share.

In addition to the $3.5 billion write down the company is setting aside $713.6 million more other anticipated losses. $613.5 million of that amount is earmarked for specific endangered bonds.

Reuters reported that MBIA is in danger of losing top credit ratings from Moody's Investors Service. That would make it harder for the company to acquire new business and might force existing investors to sell billions of dollars of securities. Reuters said that raising capital as MBIA is hoping to do will not be easy, citing rival Ambac Financial Group's failed attempt to raise $1 billion in equity earlier this month.

Raising new funds probably won't be made any easier either by Tuesday's statement by Connecticut State Attorney General Richard Blumenthal that his office has issued subpoenas to all major rating agencies and bond insurers as part of an investigation of industry practices related to subprime mortgage lending.

While none of the financial institutions receiving subpoenas were named, Blumenthal did specifically say that MBIA and Ambac were among those receiving the legal notices.

In an interview reported by Reuters on Tuesday Blumenthal said his office is investigating the role of investment banks in "problematic practices in the ratings and securities areas."

"We have an investigation relating to possible wrongdoing involving the bond insurers and mortgage lenders and also the investment banks, seeking to know whether people buying securities backed by mortgage debt may have been misled by failures to disclose relevant facts on the risks involved," said Blumenthal.

Blumenthal's announcement in turn came on the heels of another disclosure from the Federal Bureau of Investigation (FBI) that it is looking into the activities of 14 financial institutions who are caught up in subprime mortgage losses. None of the companies was identified by the FBI but the guessing game has begun.