It’s enough to make you wonder when we’ll be running out of shoes: the latest shoe to drop in terms of a burgeoning mortgage-backed credit crisis was MBIA’s midnight release of fourth quarter earnings Thursday, which found the world’s largest monoline reporting a quarterly loss of $2.3 billion, or $18.63 per share — its biggest-ever loss. MBIA’s market cap is just $1.75 billion; the insurer said it would look to find even more ways to raise capital after the loss, as it continues to fight to hold onto its own AAA rating. Warburg Pincus must be tickled pink at the news. The private equity firm’s $500 million investment into the troubled bond insurer closed and funded one day earlier, with MBIA chief Gary Dunton touting a $1.5 billion boost to its capital position. “We believe that these steps, along with reduced capital requirements resulting from slower business growth,” Dunton said, “will result in our capital position surpassing rating agency Triple-A requirements as currently articulated and will allow us to continue serving the needs of our clients and investors.” As currently articulated is the key phrase from above; in addition to Fitch, which has already begun downgrading various monolines, many expect both Standard & Poor’s and Moody’s to update their assessment of the capital needs of bond insurers within the next few days. Via Bloomberg:

Bond insurers guarantee $2.4 trillion of debt combined and are sitting on losses of as much as $41 billion, according to JPMorgan Chase & Co. analysts. Their downgrades could force banks to write down $70 billion, Oppenheimer & Co. analyst Meredith Whitney said yesterday in a report … “MBIA can raise more capital, but will probably need to sell the attractive parts of its business to do so,” said Toby Nangle, who helps oversee $37 billion as head of global aggregate business at Baring Asset Management in London. “They’re a long way from being out of the woods. A downgrade is still a real possibility.”

Felix Salmon at Portfolio.com thinks MBIA is a downgrade waiting to happen, and links in to the latest research by Pershing Square’s Bill Ackman that’s been causing a stir. If Ackman’s right, after reading his letter, I don’t know how MBIA holds on to its AAA-rating. Shares of MBIA were trading down roughly 14 percent in pre-market activity on the New York Stock Exchange Thursday morning. Disclosure: The author held no positions in MBI when this story was originally published.