Buffett's No Godfather to Bond Insurers

Updated from 11:26 a.m. EST

While Warren Buffett may be one of the savviest investors on Wall Street, his offer to struggling bond insurers proves he's no Vito Corleone: It's an offer they can refuse.

The Oracle of Omaha's offer, made public Tuesday in an interview with CNBC, is to reinsure some $800 billion in municipal bonds held by Financial Guaranty Insurance Co., MBIA(MBI Quote) and Ambac Financial(ABK Quote) -- three of the most cash-strapped bond insurers. The monoline bond insurers' struggles have caused the ratings agencies to downgrade or threaten downgrades to their pristine credit, which threatens to prompt further trouble in the broader financial markets.

Nevertheless, one of the firms -- which Buffett wouldn't name in the CNBC interview -- has already rejected the offer and the other firms are not likely to line up in support of the so-called rescue either. ...