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Latest Comments26 Comments
FDIC Guarantee: More Toxic Than the Target Itself
To relieve the pressure on the FDIC in regard to its FDIC-backed paper, what the government needs to do is first to restore the credit-rating of the insurers in the private sector -- especially the monoliners.
Will TARP Cover Both Ambac and MBIA?
I have enjoyed reading your very sensible analysis about MBI and ABK.
Here's an article by the New York State Insurance Regulator on the Prospects of the Financial Guarantors:
Oct. 8 (Bloomberg) -- Eric Dinallo, superintendent of the New York State Insurance Department, comments on the outlook for the bond insurance industry. He spoke in an interview on Bloomberg Television.
On whether there's a future for bond insurers:
``I think the news about the housing sales going up is really huge, because that implies that we've begun to hit bottom on the defaults and the market is beginning repricing. Then that means the defaults will begin to end as you can get some kind of a mortgage or some sort of transaction that clears prices.
``If that happens, then the defaults will level off, as we've said time and again, then you begin to see the bond insurers not have such a black hole that they have to pay off on. ``I think they do have a life and a future. I think the muni-market is being hammered in part because everyone's frozen, they don't know what rating they're going to go to market on.
``Once they figure out the future ratings, what they want to come to market as, I've said before that tens of thousands of small municipalities still have to commoditize. They've got to be tradable at a price, and that means at a rating. Because all of these traders are not going to do diligence for all of the municipalities out there, and that's what I think bond insurance's biggest opportunity is, is to commoditize them.
On why bond insurers aren't on the federal government's bailout list: ``If the other side of their obligations is on the list, in other words if you see those CDOs getting sold into the $700 billion marketplace, then presumably the CDSs that the bond insurers have written get extinguished. ``That will be a huge up-tick for the position of bond insurers. If they get through this, then we will begin to see credit unfreeze, municipalities come to market.''
Of Guarantees and Printing Presses
----
Oct. 8 (Bloomberg) -- Eric Dinallo, superintendent of the New York State Insurance Department, comments on the outlook for the bond insurance industry. He spoke in an interview on Bloomberg Television.
On whether there's a future for bond insurers:
``I think the news about the housing sales going up is really huge, because that implies that we've begun to hit bottom on the defaults and the market is beginning repricing. Then that means the defaults will begin to end as you can get some kind of a mortgage or some sort of transaction that clears prices.
``If that happens, then the defaults will level off, as we've said time and again, then you begin to see the bond insurers not have such a black hole that they have to pay off on.
``I think they do have a life and a future. I think the muni-market is being hammered in part because everyone's frozen, they don't know what rating they're going to go to market on.
``Once they figure out the future ratings, what they want to come to market as, I've said before that tens of thousands of small municipalities still have to commoditize. They've got to be tradable at a price, and that means at a rating. Because all of these traders are not going to do diligence for all of the municipalities out there, and that's what I think bond insurance's biggest opportunity is, is to commoditize them.
On why bond insurers aren't on the federal government's bailout
list: ``If the other side of their obligations is on the list, in other words if you see those CDOs getting sold into the $700 billion marketplace, then presumably the CDSs that the bond insurers have written get extinguished. ``That will be a huge up-tick for the position of bond insurers. If they get through this, then we will begin to see credit unfreeze, municipalities come to market.''
Shttp://messages.finan...
Cheers,
The Last Days of Morgan Stanley
siliconinvestor.advfn....
Cheers,
The Last Days of Morgan Stanley
siliconinvestor.advfn....
Cheers,
Epic Lehman CDS Auction Tomorrow: Timeline
For those people still interested in what happened today in the Lehman CDS auction today it was not the financial atomic bomb everyone expected. The entire cost of the nearly $400 Billion in CDS outstanding would up being only $8 Billion total once all the paperwork was worked out. It seems that banks bought/sold CDS from themselves. I'm sure there is some arcane accounting benefit to this that allowed them to profit but I'm not sure what it would be.
"It won't be easy to draw up a quick winners and losers column, however. Buyers of insurance are also sellers and vice versa. The International Swaps and Derivatives Association says all this netting out means the ultimate payout among trading partners may be closer to 2% of the gross outstanding $400 billion, or $8 billion."
I think the financial markets could breath a sigh of relief that there wasn't a giant smoking hole in the financial industry today. This may account for the end of day rally to some degree. It looks like we may get through this bloodied but not dead.
Full Story: messages.finance.yahoo...
Cheers,
Ambac, MBIA: Moody's strikes again
SEC tightening rules on short selling:
www.investorvillage.co...
Cheers,
Ambac, MBIA: Moody's strikes again
Imagine if ABK would be able to liqudiate its CDS portfolio according to "hold to maturity" valuation.
Cheers,
Cheers,
Ambac, MBIA: Moody's strikes again
the problems roiling the financial markets, will get some regulatory
oversight from New York state, Gov. David Paterson announced Monday.
Credit default swaps are contracts that enable institutional investors
to bet on the likelihood of companies defaulting on the debts. The
market for these contracts has grown from nothing a decade ago to $62
trillion of notional volume this year. Despite this extraordinary
growth, the credit default swaps market has remained outside the
purview of federal or state regulators, largely because they accepted
Wall Street’s argument that swaps are not securities or insurance
policies.
That seems poised to change. Mr. Paterson said the state Department of
Insurance issued guidelines to establish that credit default swaps are
a form of insurance and, hence, subject to state regulation.
“We are going to ensure that whoever sells them [credit default]
protection is solvent, in other words, can actually pay the claims,”
said Eric Dinallo, the New York state Department of Insurance
superintendent. “There is currently no such protection for
policyholders.”
Credit default swaps were a major factor in the difficulties
experienced by American International Group Inc., the giant insurer
taken over by the federal government last week. AIG wrote insurance
against tens of billions worth of credit default swaps and had to post
billions of additional collateral when the value of those swaps
declined due to growing mortgage defaults, causing the losses that
nearly bankrupted the firm.
"The state of New York should proceed very cautiously and in
consultation with federal regulators before acting in a way that may
ultimately cause more harm than good," said Robert Pickel, executive
director and chief executive officer at the International Swaps and
Derivatives Association, a trade group representing Wall Street firms.
Source: www.crainsnewyork.com/...
Comment: Great boost of confidence in ABK, MBI and other licensed
financial guarantors.
Evaluating Ambac: Intrinsic Value Withstanding Market Volatility
www.investorvillage.co...
ABK -- The 100,000,000 Shares Short Position
www.investorvillage.co...
Evaluating Ambac: Intrinsic Value Withstanding Market Volatility
ih.fotothing.com/43985...
Cheers,
Another Look at Fannie and Freddie's Mess
Paulson's push of covered bonds issued by the big banks could alleviate the stated problem above.
Evaluating Ambac: Intrinsic Value Withstanding Market Volatility
SCA -- Huge Injection of Capital
NEW YORK (Associated Press) - XL Capital Ltd. Monday said it is bailing out its former subsidiary Security Capital Assurance Ltd., saving the bond insurer from insolvency.
The Bermuda-based insurer also said its profit tumbled 56 percent in the second quarter as softening market conditions continue. It announced management changes and a dividend cut and said it was conducting a strategic review of its life reinsurance operations.
XL will pay SCA about $1.78 billion in cash, issue 8 million shares to SCA and transfer its 46 percent stake in SCA to a trust. The agreement substantially eliminates XL Capital's total net exposure under reinsurance agreements and guarantees with SCA subsidiaries.
Simultaneous with the creation of the trust, SCA will terminate eight credit default swap agreements with Merrill Lynch & Co. and the related financial guarantee insurance policies with an insured gross par outstanding of $3.74 billion at June 30. SCA will pay Merrill $500 million in exchange.
Regulators including the New York State Insurance Department have signed off on the deal, which remains subject to other conditions including a successful $2.5 billion capital raise by XL Capital.
After paying preferred dividends, the Hamilton, Bermuda-based insurer earned $237.9 million, or $1.34 per share, compared with a profit of $544.5 million, or $3 per share, a year ago.
Operating profit, which insurers emphasize because it excludes investment losses and other costs insurers do not consider reflective of their business, totaled $1.50 per share.
Analysts expected that result to be $1.94 per share, according to Thomson Financial.
Profit in the insurance division dropped nearly 28 percent to $73.8 million. XL spent 94 cents of each premium dollar administering claims, compared with 90.6 cents on the dollar last year.
In the reinsurance division, which writes contracts promising to cover losses on insurers' insurance policies, profit more than halved to $54.5 million from $129.8 million. The company spent 89 cents of each premium dollar, more than 10 cents above the 2007 quarter.
Looking ahead, XL Capital expects to post a charge of $50 million to $60 million in the rest of the year, related to its decision to cut up to $120 million from its run rate operating expenses from 2009 onwards.
XL halved its quarterly dividend to 19 cents per share, payable Sept. 30 to shareholders of record Sept. 12. The prior payout was 38 cents.
Also, Chief Operating Officer Henry Keeling is retiring Aug. 1, and XL Capital said it was eliminating the COO post.
In other management news, Michael Lobdell, executive vice president and chief executive of global business services, is leaving Aug. 31, while Fiona Luck, chief of staff, was named special adviser to the CEO.
XL Capital shares fell more than 10 percent to $16.52 in after-hours trading Monday. The stock closed at $18.37. Security Capital shares soared 88 percent to 98 cents in after-hours trading.
Full Story: money.cnn.com/news/new...
ih.fotothing.com/43092...
Mkt close: $.52, AH Close: $.95
New York Times Co. - No End to the Pain in Sight
The charts show that NYT is trading at its 10 year low, and its put/call option open interest ratio reached the 100% percentile reading on July 15th.
<p>www.fotothing.com/phot...
<p>www.fotothing.com/phot...
<p>http: fotothing.com/photos/u...
Since the New York Times is one of chrished tradition, I hope that the threatened attack by abusise shorting will not materialize, or that the SEC will put a stop to it under its new anti-abusive-shorting rules.
Countering the AP's 'E*Trade Financial Earnings Preview'
I think that the market over the next several months will prove that Leyton has made a big mistake in liquidating this sound investment, and taken the $83 million pretax loss.
Cheers,