Update: No downgrade for MBIA

Ron: …the worst is behind them…eventually, the bulk of these suddenly hated products will mature and pay off face value

This is going to pay anywhere close to face value?

The only thing I can think of is that S&P was assured that the banks whose CDO’s Ambac and MBIA insure won’t let them fail because if they do fail, S&P is opening themselves up to being sued like you would not believe.

The problems for ABK and MBI will be over sooner than later, and the worst is behind them. Both companies have already indicated that they will no longer be insuring the CDO/Mortgage junk that got them into this hole in the first place. So this problem, with time, will simply disappear.

Additionally, much of their insured CDO/Mortgage product is currently priced irrationally. What we have is not so much a bond crises as it is a liquidity crises. When you have a product no one wants, its hard to value it at face value. But, eventually, the bulk of these suddenly hated products will mature and pay off face value.

I find it sweet justice that the banks are the ones that are having to come to the rescue of the insurers… because the banks are the ones who got them in this fine mess to begin with.

The banks, supposed pillars of responsible finance, got caught up in the greed game and joined the fray to bilk the consumer by promoting adjustable rate mortgages and other exotic product while fixed rates were near all-time lows.

I also believe that if the banks had not stepped up to provide the safety net for the insurers, that the insurers would be attempting to sue them in court for fabricating information on loan applications to get people approved that had no business getting approved for a loan in the first place.

How to solve this mess from happening again in the future? No more repackaging and reselling the loans as soon as the ink dries on the original contract. Force the banks and mortgage companies who are writing these loans to hold them on their books until maturity.

Buffett is the biggest loan shark of them all. He just knows how to invest in things that don’t lose. Muni-bonds will just force the public to pay higher property taxes. What does AAA really give u? They must pay for gambling. I want to see blood spilled! It’s so lame.

What’s the song again ? “Lies, tell me sweet little lies, tell me lies..”

Let’s see,

Downgrade AMBAC and MBIA and watch in horror as the market implodes or say that they are still triple “A” agencies and avert the catastrophe for a few months longer.

The ship is still sinking.

Lost total faith in standard & Poor’s. How can ABK and MBI have AAA ratings with Buffet taking away thier muni business and they are still holding depreciating assets?

Its a healthy re-start for Ambac (ABK) and MBIA (MBI) to keep its triple A ratings to maintain confidence levels.

Cheers,

“a deal to recapitalize Ambac has been worked out and needs only to get approval from the rating agencies” Why is an approval given by parties with deeply vested interests (rating agencies) now taken seriously by anyone other than Ambac? Which triple-A sounds better; Warren Buffet’s or SKIN OF THE TEETH?