It turns out that Bill Ackman really was right. The Pershing Square fund manager, famously short on MBIA, has maintained all along that the bond insurer didn't deserve its Aaa rating; and by Thursday evening, all three major rating agencies finally agreed with him. Following the lead of Standard & Poor's Rating Services on June 5, Moody's Investors Service said late Thursday that it had also downgraded core ratings of the monoline bond insurance subsidiaries of MBIA, Inc. (MBI) and Ambac Financial Group, Inc. (ABK). MBIA Insurance Corp. saw its insurance financial strength ratings downgraded all the way to A2 from Aaa, a five-notch downgrade, while Ambac saw its ratings trimmed to Aa3, down three notches. In both cases, Moody's cited "substantial uncertainty about the ultimate performance of ... mortgage related exposures." MBIA's deeper ratings cut came as Moody's said that the company's insured portfolio "remains vulnerable to further economic deterioration, particularly given the leverage contained in its sizable portfolio of resecuritization transactions, including some commercial real estate CDOs." That same vulnerability was not a factor for Ambac, the agency said. Naturally, MBIA said it was "disappointed" in the ratings cut -- and even went so far as to say it was "baffled by their analysis" in a press statement. "With $16 billion in claims-paying resources, as the company has made clear in numerous public statements, we have more than enough capital to meet obligations to policyholders," MBIA said. "This is an issue of ratings and not solvency." Perhaps, but it's the ratings that matter most to investors and -- in particular -- banks, who now must account for counterparty downgrades in their upcoming estimates of exposure to such toxic financial instruments as collateralized debt obligations. In mid-Feburary , Oppenheimer & Co. analyst Meredith Whitney estimated that Citigroup Inc. (C), Merrill Lynch & Co. (MER) and UBS AG (UBS) — three firms with the largest relative exposure to the monolines — could face losses of more than $10 billion were downgrades to materialize. Shares in MBIA were off 7.36 percent, to $5.97, when this story was published; Ambac shares fell more modestly, and were off 1.97 percent to $1.99. Disclosure: The author held no stock positions of relevance to this story when it was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.