Barclays analysts say banks that obtained $72 billion in funding to replenish capital depleted by subprime-related losses may need another $143 billion in capital infusions if credit rating agencies downgrade bond insurers several levels, Bloomberg News reported Friday.

Barclays analyst Paul Fenner-Leitao Banks wrote in a research report published Friday that banks will need at least $22 billion if bonds covered by insurers MBIA (NYSE: MBI) and Ambac (NYSE: ABK) are cut one level from the current AAA and six times that if they are cut four levels, Bloomberg said. The capital amount is based on Barclays' estimates that the banks hold as much as 75% of the $820 billion of the structured securities guaranteed by bond insurers.

Meanwhile, the markets awaited word on New York Insurance Superintendent Eric Dinallo's meeting with banks on a bail-out package for bond insurers. Shares of some key bond insurers fell after Dinallo issued a statement that the negotiations were complicated and would take time, leading some in the market to doubt the New York agency's ability to marshal private resources for the initiative.

MBIA fell 79 cents to $13.61, Ambac gained 15 cents to $11.48, PMI Group (NYSE: PMI) rose 17 cents to $8.97, and MGIC Investment (NYSE: MTG) declined 6 cents to $16.68.

"Clearly it is important to resolve issues related to the bond insurers as soon as possible. However, it must be understood that these are complicated issues involving a number of parties, and any effective plan will take some time to finalize," Dinallo said in a statement. "In the meantime, we will not respond to the inevitable rumors. We believe it is important that the goals of market stability, protection for policyholders and a healthy and competitive bond insurance market be realized in the near future."

Critical funding

Economist David H. Wang told BloggingStocks on Friday that the insurers' funding remains essential for the insurers, for liquidity for the banks involved, and ultimately, for the financial system itself, in his interpretation.

"There's no two ways around it, a capital infusion in some form has to occur. A lack thereof results in credit rating downgrades, which requires banks to immediately add massive amounts of capital. That immediate demand will have a series of unpleasant market and financial system consequences. I don't think we want to go there," Wang said. "The bond insurers are one support in the financial foundation that cannot be allowed to fail, in my view. The money is critical to sound, functioning financial markets,"

Economists and analysts say the new capital would not only preserve the credit ratings of top bond insurers such as MBI and Ambac, but would also bolster investor confidence in this key component of the mortgage finance process. Mortgage insurers guarantee about $2 trillion in mortgage assets.

Wang has argued that the insurer solvency issue is paramount enough to warrant a special capital meeting coordinated by the U.S. Treasury and/or the U.S. Federal Reserve, but if the New York state insurance regulator meetings have the same result -- capital infusion for the key insurers -- the positive results will be the same.