MBIA and Ambac: Watch Out Next Week

If I have understood this corectly Banks with insudre binds on their balance sheet are going to have to report their real value if the insurer goes bankrupt as per MER's decision to write down insured bonds as part of their big bath as the insurance was technically there on paper for accounting purposes but in the real world no longer likely to be paid out on. MER was a vlountary act it seems, others are probably clinging to insured vaues because it is technically within GAAP to do so.

Have I gor this right?
 
It took a world war to recover. [/B][/QUOTE]

Well now, everybody has their knickers in a knot. Those poor bastards in '29 had to wait 12 1/2 years for their War. We won't have to wait nearly as long.

I'm so relieved.
 
Quote from mokwit:

If I have understood this corectly Banks with insudre binds on their balance sheet are going to have to report their real value if the insurer goes bankrupt as per MER's decision to write down insured bonds as part of their big bath as the insurance was technically there on paper for accounting purposes but in the real world no longer likely to be paid out on. MER was a vlountary act it seems, others are probably clinging to insured vaues because it is technically within GAAP to do so.

Have I gor this right?
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That's how I see it. When they mark these securities down, it should result in margin calls requiring additional selling, and maybe the next leg down.
 
I thought MER shoved most of the SIV CMO and Conduits from a trading account to a "hold until maturity account"... to avoid mark to market...

Thain aint there because he looks good in a suit....
 
Government will bail out the insurers at the behest of Wall St to stave off technical insolvency, just like FASB delayed the rule that would have required SIV's to come onto the balance sheet.

Lot's of "you need to be more of a team player, this is a NATIONAL SECURITY issue"/"how about a tax break" 'phone calls being made no doubt.
 
Friggin house of cards.....what's a few hundred billion here and there....in the old days you had to raise taxes and issue war bonds to fund wars. Not nowadays ya just print $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ until you become the Weimar Republic

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money_to_burn.jpg


Burning_Money.jpg
 
Think of all the mutual funds, insurance companies and pensions holding municipals and other bonds guaranteed by these bond insurers. Suddenly, the triple A rating goes out the window and they have to sell because they can't hold anything less than triple A. They start selling, which causes prices to drop, this results in margin calls and more selling, and so on....
 
http://online.barrons.com/article/SB120071150488302379.html

Before Warburg cut its deal with MBIA it brought in outside consultants to stress-test the company's portfolio, subjecting it to Armageddon-like housing and other economic assumptions. It found that annual loss expenses -- actual checks written -- came to no more than about $250 million a year under the harshest of conditions.

Balance that against MBIA's assumption, even in run-off, that the company could continue to generate annual revenues of $1.3 billion to $1.4 billion, just from growing net investment income from reserves and other assets; installment premiums from existing customers; investment-management revenues from various funds it runs for municipalities and other customers, and already-collected insurance premiums that get booked into revenues as coverage periods expire.

As a result, some observers claim that, conservatively, the present value of MBIA's liquidation value in run-off is likely to be $30 to $40 a share. If true, it would appear that MBIA has long way to go on the upside, dead or alive."



SO, is a bottom in (in these stocks at least) and are there massive financial opportunities at hand or is the CDS market such a mess that it will take years and billions in write downs to wort enevrything out?
 
Quote from Mvic:


It found that annual loss expenses -- actual checks written -- came to no more than about $250 million a year under the harshest of conditions.
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thats interesting. the company announced they expected $800million in losses on their HELOCs and CES
http://www.mbia.com/faq/faq_read_answer.jsp?FAQ_ID=338
the $800million is VERY likely understated for the simple reason that the company said it expected $0 losses from that exposure just a few months back. when they announced the $800m they were under capital raising pressure there was no way they would come forward and say they were going to big huge losses there
Plus there is the BIG public finance, cdos squared and others
they might not be immediate payments but that will get them downgraded and then shareholders arent likely to get anything out of it, even if the company zombies its way to survival
 
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