Exhibit 10.67


                                                 [MBIA LETTERHEAD]


                                                                     May 6, 2004


Gary C. Dunton
98 Golf Lane
Ridgefield, CT  06877

Dear Gary:


         On behalf of MBIA Inc. (the "Company") and the Board of Directors (the
"Board"), we want to thank you for your outstanding efforts on behalf of the
Company and congratulate you on your promotion to Chief Executive Officer. We
are confident that you possess the skills, experience and leadership
characteristics required to help the Company further build its business. We have
outlined below the impact that certain terminations of your employment will have
on equity and long-term incentive awards granted to you by the Company. Except
as expressly set forth herein or in your Key Employee Employment Protection
Agreement dated as of January 25, 1999, (i) you will not be eligible for any
other severance or termination payments or benefits in connection with any
termination of your employment and (ii) the terms of your existing equity-based
and long-term incentive awards shall continue to be governed by the terms of the
original award agreements.

         1. Modifications to Outstanding Awards.

              (a) Stock Option Awards. Reference is made to your stock option
         agreements with the Company dated as of January 9, 1998, December 9,
         1998, January 7, 1999, December 9, 1999, January 11, 2001, February 7,
         2002, February 12, 2003 and February 10, 2004 (the "Option
         Agreements"). Each of the Option Agreements is hereby amended to
         provide that if your employment is terminated by the Company other than
         for Cause, or by you in a Constructive Termination Without Cause (the
         date of such termination of employment, the "Termination Date"), in
         each case on or before the fourth anniversary of the date hereof (such
         date, the "Target Date"), the vesting and exercisability terms with
         respect to such stock options shall be determined as if you remained
         employed with the Company through the fifth anniversary of the
         Termination Date (such date, the "Vesting Measure Date"), and any stock
         options that have not previously vested shall become fully vested and
         exercisable on the Vesting Measure Date. Following the Vesting Measure
         Date, your stock options shall remain exercisable until the earlier of

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         (i) the first anniversary of the Vesting Measure Date and (ii) the
         expiration of the original term with respect to each such stock option
         as provided under the applicable Option Agreement. Notwithstanding the
         foregoing, if on any date prior to the Vesting Measure Date (such date,
         the "Acceleration Date"), the Company's common stock closes at a
         trading price that is (i) greater than or equal to $90 per share and
         (ii) greater than or equal to 150% of the closing price on the
         Termination Date, then all of your previously unvested options shall
         vest and become immediately exercisable and remain exercisable until
         the earlier of (i) the first anniversary of the Acceleration Date and
         (ii) the expiration of the original term with respect to each such
         stock option as provided under the applicable Option Agreement and
         shall thereafter expire and be forfeited. Except as expressly provided
         in this Paragraph 1(a), the terms of your Option Agreements shall
         continue in full force and effect. For purposes of this letter
         agreement, the terms "Cause" and "Constructive Termination Without
         Cause" shall each have the meanings assigned to such terms under the
         award agreement of even date herewith setting forth the terms and
         conditions of the award of 125,000 Company shares of restricted stock
         (the "2004 Award Agreement").

              (b) MBV Awards. In the event that your employment is terminated by
         the Company other than for Cause, or by you in a Constructive
         Termination Without Cause, any of your then outstanding MBV awards
         shall be paid to you solely in the discretion of the Board in a manner
         consistent with past practice. For the avoidance of doubt, the
         restricted shares subject to your 2004 Award Agreement shall not be
         treated as MBV awards, and shall be governed by the terms of the 2004
         Award Agreement.

         2. Severance. In the event that your employment is terminated by the
Company other than for Cause, or by you in a Constructive Termination Without
Cause, severance shall be paid to you solely in the discretion of the Board in a
manner consistent with past practice, taking into account your base salary,
annual bonus opportunity and anticipated retirement plan contributions at the
time of your termination of employment.

         3. Change of Control Protection. The 2004 Award Agreement contains a
provision designed to hold you harmless, on an after tax basis, from any excise
tax you incur in connection with your employment under section 4999 of the
Internal Revenue Code of 1986, as amended. For the avoidance of doubt, any
benefits payable to you under the terms of this Agreement that are treated as
being contingent upon, or otherwise related to, a change of control of the
Company, will be taken into account in determining whether, and to what extent,
you are entitled to receive any benefits under such provision.

         4. Post-Termination Restrictive Covenants. You hereby agree that during
the Employment Period and for two years thereafter, you shall not directly or
indirectly personally hire, personally solicit or personally help another hire
or solicit any Company employees, (ii) directly or indirectly induce or

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encourage any Company employee to terminate employment with the Company, (iii)
direct any business opportunities developed on behalf of the Company for your
own benefit or for the benefit of any of your future employers, (iv) directly or
indirectly solicit any of the Company's customers to use the services of another
entity in lieu of those of the Company, or (v) seek or accept employment with
any of the entities (or their affiliates) listed on Appendix A attached hereto
or with any other entity created after the date hereof that materially competes
with any of the Company's substantial business operations.


         Please confirm your acceptance of the terms set forth in this letter
agreement by signing below.


Sincerely,



     /s/  David C. Clapp
--------------------------------
David C. Clapp
Member of the Board of Directors



     /s/  Kevin D. Silva
--------------------------------
Kevin D. Silva
Vice President & Chief Administrative Officer



Agreed and Accepted:       /s/  Gary C. Dunton
                    -------------------------------
                                Gary C. Dunton


Date:  May 6        , 2004
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                                   APPENDIX A


ACE Guaranty Corp.
Ambac Assurance Corp.
CIFG
DePfa
Financial Guaranty Insurance Co.  (FGIC)
Financial Security Assurance (FSA)
Radian Asset Assurance Inc.
XL Capital


The above listed companies shall be deemed to include each of the subsidiaries
and affiliates of each of such companies, whether now existing or hereafter
created.



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