Mr kumar

Ambac, MBIA Are Still Shorts Amidst This Wink-and-Nod

Hi All,

Its totally expected that the rating agencies will give the AAA ratings to ambac and mbia. Remember that the rating agencies are compensated by the banks. If the ratings agencies downgrade these 2 companies then the banks will loose hundreds of billions in write-downs.
Its like this, give the ratings , and stick with them till this crisis is solved. I dont believe that even after Q1 results these ratings will be downgraded, however bad these Q1 results may be.
The rating agencies , regulators , GSE's , govt will move any possible
number of goal posts to stop the banks from taking more losses.
If losses can be prevented by assurances from rating agencies, GSE's , govt etc , all sort of assurances will be given.

However as usually happens , its the actual market that decides the losses for these banks , GSE's. Investors are already behaving as though the ratings for these companies is junk , investors will behave that the bonds insured by them also are below par value.
This is a good sign , since the credibility of the ratings agencies will be diminished , along with credibility goes blind trust o them.
So investors will do their own due dilligence instead of relying on these agencies