Crocodilian

AIG Now Fed's Vehicle for Buying Toxic Assets

thanks for this very thoughtful article. One of the great tragedies here is the opacity of the transactions, and as you note, the absence of the price discovery that an arm's length trade would have given.

You make a very subtle point in observing that ABK and MBIA's counterparties were forced to take a significant markdown because solvency was a question for the monolines; the notion that the very fact of the Fed involvement in AIG makes their negotiating position paradoxically worse-- well that's a great point, not obvious, but once understood, very important.