crashof2008

Help for the Guarantors - From an Unexpected Source

Er, this is a little cute, but it is WAY off the mark. Obviously you haven't taken any math beyond college algebra. Oh well.

Did it ever occur to you that one of the key reasons MBI is tanking today is because of their 8-K they filed with the SEC yesterday?

It's a felony to lie to the SEC, so they are usually more accurate in their filings with them than with what they tell their bloggers acting in their behalf.

READ THE 8-K FILED WITH THE SEC yesterday.

Looks like the fallout from the initial stages of implementation of FASB 163 is REALLY starting to bite!

Monolines Trying CDO Buyouts

Don't EVER assume that MBI's estimate of how much collateral will be required is gospel. That is a hopelessly naive position. It is up to the counterparties to decide whether to demand extra margin. That figure is simply an exceptionally optimistic estimate of MBI.

In terms of MBI and ABK attempting to cancel 125 billion in credit default swaps in intense negotiations with Citibank, Merrill and UBS. Most accounts put MBI's share at 80 billion of this.

Any negotiations to cancel the 80 billion in insurance contracts that MBI wrote will be extraordinarily problematic, especially in this environment of collapsing bank profits.

To understand why, you need to master the difference between a CDO and a CDS. The difference between these two is an absolutely VITAL distinction that so many overlook.

I'll keep it short and sweet. But you need to master this distinction. Read carefully for just 30 seconds and it will serve you well.

Think of a CDS (credit default swap) as an insurance policy. MBI insured 80 billion of largely worthless paper to various banks. They are, after all, an insurance company and thought this would be a logical extension of their insurance business.

Now MBI wants the banks such as Merrill and Citi and UBS to cancel the insurance policies. MBI is basically offering to simply refund the premiums paid.

This would leave the banks holding 80 billion dollars of collateralized debt obligations (CDOs) that had been insured and guaranteed by MBI.

It's like if your house is destroyed in a fire. The insurance company, instead of reimbursing you for the value of the home (say $400,000) offers instead to rebate you the $1200 you have paid in premiums.

Would you take it?

This is what MBI is offering.

The End of the Monoline Bond Insurance Business

Some of you have heard about MBI and ABK attempting to cancel 125 billion in credit default swaps in intense negotiations with Citibank, Merrill and UBS. Most accounts put MBI's share at 80 billion of this.

Any negotiations to cancel the 80 billion in insurance contracts that MBI wrote will be extraordinarily problematic, especially in this environment of collapsing bank profits.

To understand why, you need to master the difference between a CDO and a CDS. The difference between these two is an absolutely VITAL distinction that so many overlook.

I'll keep it short and sweet. But you need to master this distinction. Read carefully for just 30 seconds and it will serve you well.

Think of a CDS (credit default swap) as an insurance policy. MBI insured 80 billion of largely worthless paper to various banks. They are, after all, an insurance company and thought this would be a logical extension of their insurance business.

Now MBI wants the banks such as Merrill and Citi and UBS to cancel the insurance policies. MBI is basically offering to simply refund the premiums paid.

This would leave the banks holding 80 billion dollars of collateralized debt obligations (CDOs) that had been insured and guaranteed by MBI.

It's like if your house is destroyed in a fire. The insurance company, instead of reimbursing you for the value of the home (say $400,000) offers instead to rebate you the $1200 you have paid in premiums.

Would you take it?

This is what MBI is offering.

Insurer-Cut 'Hurricane' Hits

Enter your comment hereSome of you have heard about MBI and ABK attempting to cancel 125 billion in credit default swaps in intense negotiations with Citibank, Merrill and UBS. Most accounts put MBI's share at 80 billion of this.

Any negotiations to cancel the 80 billion in insurance contracts that MBI wrote will be extraordinarily problematic, especially in this environment of collapsing bank profits.

To understand why, you need to master the difference between a CDO and a CDS. The difference between these two is an absolutely VITAL distinction that so many overlook.

I'll keep it short and sweet. But you need to master this distinction. Read carefully for just 30 seconds and it will serve you well.

Think of a CDS (credit default swap) as an insurance policy. MBI insured 80 billion of largely worthless paper to various banks. They are, after all, an insurance company and thought this would be a logical extension of their insurance business.

Now MBI wants the banks such as Merrill and Citi and UBS to cancel the insurance policies. MBI is basically offering to simply refund the premiums paid.

This would leave the banks holding 80 billion dollars of collateralized debt obligations (CDOs) that had been insured and guaranteed by MBI.

It's like if your house is destroyed in a fire. The insurance company, instead of reimbursing you for the value of the home (say $400,000) offers instead to rebate you the $1200 you have paid in premiums.

Would you take it?

This is what MBI is offering.

Ambac, MBIA: The Rating Shoes Drop

Enter your comment hereSome of you have heard about MBI and ABK attempting to cancel 125 billion in credit default swaps in intense negotiations with Citibank, Merrill and UBS. Most accounts put MBI's share at 80 billion of this.

Any negotiations to cancel the 80 billion in insurance contracts that MBI wrote will be extraordinarily problematic, especially in this environment of collapsing bank profits.

To understand why, you need to master the difference between a CDO and a CDS. The difference between these two is an absolutely VITAL distinction that so many overlook.

I'll keep it short and sweet. But you need to master this distinction. Read carefully for just 30 seconds and it will serve you well.

Think of a CDS (credit default swap) as an insurance policy. MBI insured 80 billion of largely worthless paper to various banks. They are, after all, an insurance company and thought this would be a logical extension of their insurance business.

Now MBI wants the banks such as Merrill and Citi and UBS to cancel the insurance policies. MBI is basically offering to simply refund the premiums paid.

This would leave the banks holding 80 billion dollars of collateralized debt obligations (CDOs) that had been insured and guaranteed by MBI.

It's like if your house is destroyed in a fire. The insurance company, instead of reimbursing you for the value of the home (say $400,000) offers instead to rebate you the $1200 you have paid in premiums.

Would you take it?

This is what MBI is offering.

Whitman's Q2 Letter and Disclosure Requirements

Enter your comment hereSome of you have heard about MBI and ABK attempting to cancel 125 billion in credit default swaps in intense negotiations with Citibank, Merrill and UBS. Most accounts put MBI's share at 80 billion of this.

Any negotiations to cancel the 80 billion in insurance contracts that MBI wrote will be extraordinarily problematic, especially in this environment of collapsing bank profits.

To understand why, you need to master the difference between a CDO and a CDS. The difference between these two is an absolutely VITAL distinction that so many overlook.

I'll keep it short and sweet. But you need to master this distinction. Read carefully for just 30 seconds and it will serve you well.

Think of a CDS (credit default swap) as an insurance policy. MBI insured 80 billion of largely worthless paper to various banks. They are, after all, an insurance company and thought this would be a logical extension of their insurance business.

Now MBI wants the banks such as Merrill and Citi and UBS to cancel the insurance policies. MBI is basically offering to simply refund the premiums paid.

This would leave the banks holding 80 billion dollars of collateralized debt obligations (CDOs) that had been insured and guaranteed by MBI.

It's like if your house is destroyed in a fire. The insurance company, instead of reimbursing you for the value of the home (say $400,000) offers instead to rebate you the $1200 you have paid in premiums.

Would you take it?

This is what MBI is offering.

Rating Agencies Target Guarantors to Deflect Subprime Blame

Some of you have heard about MBI and ABK attempting to cancel 125 billion in credit default swaps in intense negotiations with Citibank, Merrill and UBS. Most accounts put MBI's share at 80 billion of this.

Any negotiations to cancel the 80 billion in insurance contracts that MBI wrote will be extraordinarily problematic, especially in this environment of collapsing bank profits.

To understand why, you need to master the difference between a CDO and a CDS. The difference between these two is an absolutely VITAL distinction that so many overlook.

I'll keep it short and sweet. But you need to master this distinction. Read carefully for just 30 seconds and it will serve you well.

Think of a CDS (credit default swap) as an insurance policy. MBI insured 80 billion of largely worthless paper to various banks. They are, after all, an insurance company and thought this would be a logical extension of their insurance business.

Now MBI wants the banks such as Merrill and Citi and UBS to cancel the insurance policies. MBI is basically offering to simply refund the premiums paid.

This would leave the banks holding 80 billion dollars of collateralized debt obligations (CDOs) that had been insured and guaranteed by MBI.

It's like if your house is destroyed in a fire. The insurance company, instead of reimbursing you for the value of the home (say $400,000) offers instead to rebate you the $1200 you have paid in premiums.

Would you take it?

This is what MBI is offering.

Ambac, MBIA: The Rating Shoes Drop

This is absurd. Did it ever occur to you that the historical volatility assumptions used in modeling the "value" of MBI's CDOs are completely irrational? Do you even know anything about the whole historical vs. implied volatility valuation debates for derivatives?

Duh.

Maybe if you had taken more than elementary algebra you would understand that MBI is truly, irrevocably bankrupt.

See you in January, when FASB 163 takes full force.

Whitman's Q2 Letter and Disclosure Requirements

This is absurd. Did it ever occur to you that the historical volatility assumptions used in modeling the "value" of MBI's CDOs are completely irrational?

Duh.

Maybe if you had beyond college algebra you would understand that MBI is truly, irrevocably bankrupt.

See you in January, when FASB 163 takes full force.

The End of the Monoline Bond Insurance Business

One phrase in MBI's recent bland assurances that they have sufficient capital to meet the acceleration clauses on these swaps is that they have "10.2 billion in securities with an AVERAGE AA rating".

What does that hedge word "average" mean here? There are many ways to compute an "average".

For example, 10 bonds worth only 10,000 dollars each that are rated just one notch above AA "averaged" with 10 bonds worth 100 MILLION dollars rated just one notch BELOW AA would constitute such an "average" under this statement, even though the practical result would be that the vast majority of the alleged "collateral" is rated below AA.

Given MBI's record of dissembling, it seems highly likely that a large part of that 10.2 billion figure they cite is BELOW AA and will therefore be insufficient as collateral.

The key weasel fudge word MBI uses here is "average". Precisely HOW are they doing this "averaging"?

On the Monolines: Brown vs. Tilson, Round 2

Brown didn't just betray the rating agencies. He betrayed the people of New York and the the insurance commissioner with his lies and his betrayal and false promises.

It's payback time now. If he thinks that he can spin off a AAA unit and provide huge bonuses in the process for him and his henchmen, he is seriously, seriously mistaken.

On the Monolines: Brown vs. Tilson, Round 2

This is one of the most inaccurate and distorted pieces of "journalism" i have ever read. It is a hodgepodge of confusion and dissembling.

The safe harbour language which he cites are about public statements offered in the connection with trading of registered securities. Nothing more, nothing less.

But to use this safe harbour language to defend MBI's completely unacceptable betrayal of its pledges to the ratings agencies is pathetic.

Earlier this year, MBI was intent on keeping its AAA rating. During the negotiations with the ratings agencies, Spitzer and Dinallo, MBI pledged that they would deploy the proceeds of various securities to be offered as a buffer to risky assets in various subsidiaries.

In exchange for this pledge, promise and commitment, all the other parties in the negotiation agreed to keep MBI's AAA rating intact on a provisional basis, pending periodic review required by the continuing collapse in key sectors of the derivatives market, including the term option bond sector used in short term muni financing, of which MBI is a market maker.

Simply stated, MBI broke that pledge they made during the negotiations. Now the ratings agencies are furious. They have been betrayed.

And to claim that somehow safe harbour language routinely issued in the issuance of securities issuance excuses their betrayal of the firm commitments they made to a number of key regulatory and quasi-public actors during critical negotiations is simply absurd.

Who are you trying to kid?

And the gibberish in this article goes on. I'll elaborate more fully shortly.

Matt

More Alarmism Over MBIA

This article by yet another apologist for MBIA ever so conveniently ignores that:

1. the monoline industry as a whole is dying as previously lucrative customers such as New York, New York City, California and Florida now do not purchase monoline insurance at horribly inflated prices but instead now issue their bonds more cheaply on the full faith and credit of the issuer, just as the Federal Government does and

2. that if MBI uses the 900 million it pledged as collateral to spin off a new entity Moody's and others are likely to downgrade MBIA two full notches or more, which would in fact be the end of MBI.

Research Zeitgeist: Bank Capitalization Concerns Heat Up

Keep in mind however that these Fed facilities, unlike their BOE and European counterparts are only 30-day loans.

A loan is not a gift.

It must be repaid.

MBIA and Ambac: Edge of the Cliff, Ratings-Wise

By MBI's own admission in their last quarterly filing, new business was down 43%.

California, New York, New Jersey, New York City and now Florida have all decided not to use monoline insurance anymore. That trend is growing rapidly. Those are huge clients.

Soon all 50 states will simply issue bonds on their own full faith and credit just like the US government does.

It's far cheaper that way.

Monolines will default long before states do.

Why does MBI refuse to give an open accounting of what's actually going on in their offshore subsidiaries? What are they trying to hide?