Old Coach

Of Guarantees and Printing Presses

Judging from the market reaction over the past few days, MBI is seen as having some chance at viability and ABK is forgotten and thrown on the trash heap. Even if it goes to run off and has to find another line of business, ABK is way undervalued.

Will TARP Cover Both Ambac and MBIA?

Interesting article. So if the reporter got it right, does that MBI and ABK can "sell" their voting rights back to the client, who then sells to TARP/Uncle Sam? If that's true then I would expect them to pursue this aggressively.

Will TARP Cover Both Ambac and MBIA?

Tom, excellent piece. We would all take 30 and throw a parade at this point. But realistically, would 15 be a reasonable target for ABK after the dust settles?

MBIA Sues Countrywide: Part of the Solution to Clean Up the Lies

Moody's and S&P should probably start adding a lot of lawyers to their litigation departments. Maybe Ackman goes after them next. Of course, that reptile will probably come back and go long on ABK and MBI.

MBIA Sues Countrywide: Part of the Solution to Clean Up the Lies

Padding or not, if the bailout goes through and assets go to the Gov't then ABK and MBI should have some nice relief. Then add in the new guidance on mark to market and the two stocks stand a very good chance of recovering to about the halfway point of their all time highs. After that, it's up to their managment to figure out the new landscape. To say management has learned the lesson on risk would be an understatement!

MBIA Sues Countrywide: Part of the Solution to Clean Up the Lies

If assets are sold to the Gov't, doesn't that take MBI and ABK off the hook?

Ambac, MBIA: Moody's strikes again

The legalese above comes from a draft of the bill.

Ambac, MBIA: Moody's strikes again

ABK and MBI may survive. The bailout bill allows Cox to suspend mark to market accounting and commissions a study. I would bet that the study endorses the trailing average approach that Newt Gingrich and others have been pushing on Congress. Combined the toxic paper going to the gov't and M to M getting suspended/amended and the monolines could be sitting pretty.

SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET AC-
COUNTING.
(a) AUTHORITY.—The Securities and Exchange Com-
mission shall have the authority under the securities laws
(as such term is defined in section 3(a)(47) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to sus-
pend, by rule, regulation, or order, the application of
Statement Number 157 of the Financial Accounting
Standards Board for any issuer (as such term is defined
in section 3(a)(8) of such Act) or with respect to any class
or category of transaction if the Commission determines
that is necessary or appropriate in the public interest and
is consistent with the protection of investors.


SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING.
(a) STUDY.—The Securities and Exchange Commis-
sion, in consultation with the Board and the Secretary,
shall conduct a study on mark-to-market accounting
standards as provided in Statement Number 157 of the
Financial Accounting Standards Board, as such standards
are applicable to financial institutions, including deposi-
tory institutions. Such a study shall consider at a min-
imum—
(1) the effects of such accounting standards on
a financial institution’s balance sheet;
(2) the impacts of such accounting on bank fail-
ures in 2008;
(3) the impact of such standards on the quality
of financial information available to investors;
(4) the process used by the Financial Account-
ing Standards Board in developing accounting
standards;
(5) the advisability and feasibility of modifica-
tions to such standards; and
(6) alternative accounting standards to those
provided in such Statement Number 157.
(b) REPORT.—The Securities and Exchange Commis-
sion shall submit to Congress a report of such study before
the end of the 90-day period beginning on the date of the
enactment of this Act containing the findings and deter-
minations of the Commission, including such administra-
tive and legislative recommendations as the Commission
determines appropriate.

Banking on Wachovia As a Bailout Trade

Not so fast. The bailout bill has a provision where Cox can suspend mark to market accounting rules (See below). And also commissions a study on its effects. If that rule gets suspended, look for the 3-year rolling average to come out of the study as the long-term solution. Newt Gingrich and others have been pushing Congress to consider it. Take out M to M and sell the bad debts to Uncle Sam and WB starts looking really good for the long haul or to command a much higher price as a takeover.

SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET AC-
COUNTING.
(a) AUTHORITY.—The Securities and Exchange Com-
mission shall have the authority under the securities laws
(as such term is defined in section 3(a)(47) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to sus-
pend, by rule, regulation, or order, the application of
Statement Number 157 of the Financial Accounting
Standards Board for any issuer (as such term is defined
in section 3(a)(8) of such Act) or with respect to any class
or category of transaction if the Commission determines
that is necessary or appropriate in the public interest and
is consistent with the protection of investors.


SEC. 133. STUDY ON MARK-TO-MARKET ACCOUNTING.
(a) STUDY.—The Securities and Exchange Commis-
sion, in consultation with the Board and the Secretary,
shall conduct a study on mark-to-market accounting
standards as provided in Statement Number 157 of the
Financial Accounting Standards Board, as such standards
are applicable to financial institutions, including deposi-
tory institutions. Such a study shall consider at a min-
imum—
(1) the effects of such accounting standards on
a financial institution’s balance sheet;
(2) the impacts of such accounting on bank fail-
ures in 2008;
(3) the impact of such standards on the quality
of financial information available to investors;
(4) the process used by the Financial Account-
ing Standards Board in developing accounting
standards;
(5) the advisability and feasibility of modifica-
tions to such standards; and
(6) alternative accounting standards to those
provided in such Statement Number 157.
(b) REPORT.—The Securities and Exchange Commis-
sion shall submit to Congress a report of such study before
the end of the 90-day period beginning on the date of the
enactment of this Act containing the findings and deter-
minations of the Commission, including such administra-
tive and legislative recommendations as the Commission
determines appropriate.

Winners and Losers in the Bailout Bonanza

Buffet goes in for GS so GS wins. Bailout from former GS CEO so GS wins. Ex GS exec now WB CEO offloads toxic paper then probably does deal with GS so now GS and WB win. BAC just got ML for a steal so BAC wins. MS will find a way to win.

Congress is posturing. They've got a gun to their heads and they know it. Mark to market accounting will be adjusted so all financials will get a break and off we go til the next crisis.

Meanwhile the idiots that we elect on both sides of the aisle will keep trying to blame each other. Throw mud at everyone in the arena so decent intelligent people stay away. All the while, the Chinese are fixing to lend us our lunch money and then eat our lunch!

Where have all the grown-ups gone?

Ambac Collapse: Anticlimax of the Week

Finally found something on the accounting rules. Saw a comment from Liz Ann Sonders at the Schwab site. She says some discussion is surrounding an adjustment, maybe temporarily, of the mark to market accounting rule. Big picture - this rule has contributed heavily to the death spiral of financials. If it's not adjusted, then banks selling their bad paper to the gov't will have to take immediate losses.

Ambac Collapse: Anticlimax of the Week

I've been reading anything I can find out there about the coming bailout. Two questions I can't answer yet. 1) If the government buys up all the bad debt, are ABK's obligations to those liabilities gone? 2) Any word on if they will revise the mark to market accounting rules?

Ambac Collapse: Anticlimax of the Week

The only question that matters now is how the new bailout will impact ABK and MBI. If the government is going to buy up all of the toxic paper, does that take the insurers off the hook? If their off the hook, how could they be downgraded? It would seem an upgrade would be logical.