Comments on: Egan Jones: Bond Insurers Need $200 Billion to Retain AAA http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200.html Mon, 23 Nov 2009 03:54:45 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: donebenson http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200.html#comment-3320 donebenson Fri, 25 Jan 2008 19:39:00 +0000 http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200-billion-to-retain-aaa/#comment-3320 The FT's Alphaville a couple of days ago quoted an RBS analyst as saying the monolines had insured about $500 billion of CDO's. I would think the losses on those CDO's would greatly exceed $15 billion. The FT’s Alphaville a couple of days ago quoted an RBS analyst as saying the monolines had insured about $500 billion of CDO’s. I would think the losses on those CDO’s would greatly exceed $15 billion.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200.html#comment-3319 Anonymous Fri, 25 Jan 2008 19:01:00 +0000 http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200-billion-to-retain-aaa/#comment-3319 Sick and tired of the phony books and the games. Time for the U.S. to get their garbage in order and let go of the notion that investors are stupid and will buy any junk you throw together. The U.S. has fallen from grace to become a bunch of scam artists. Death to the system!!!!! Sick and tired of the phony books and the games. Time for the U.S. to get their garbage in order and let go of the notion that investors are stupid and will buy any junk you throw together. The U.S. has fallen from grace to become a bunch of scam artists. Death to the system!!!!!

]]> By: F. Krull http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200.html#comment-3311 F. Krull Fri, 25 Jan 2008 11:49:00 +0000 http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200-billion-to-retain-aaa/#comment-3311 While I hate off post comment, The following needs saying. In it's first (H of R) incarnation, the stimulus package includes a "temporary" increase <br/>in the GSE limits on mortgages they can buy, going from $412,500 to $735,000. UNBELIEVABLE!<br/>It was the 9% compound average increases (from 2002 to 2007) in GSE limits that got us to $412,500, and helped enable the housing bubble in the first place. That during a time when so called core inflation was "well contained" at around 2%. Any guss as to how "temporary" it will be? While I hate off post comment, The following needs saying. In it’s first (H of R) incarnation, the stimulus package includes a “temporary” increase
in the GSE limits on mortgages they can buy, going from $412,500 to $735,000. UNBELIEVABLE!
It was the 9% compound average increases (from 2002 to 2007) in GSE limits that got us to $412,500, and helped enable the housing bubble in the first place. That during a time when so called core inflation was “well contained” at around 2%. Any guss as to how “temporary” it will be?

]]> By: Yves Smith http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200.html#comment-3308 Yves Smith Fri, 25 Jan 2008 08:26:00 +0000 http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200-billion-to-retain-aaa/#comment-3308 IA,<br/><br/>Yes and no. $15 billion is on the outer edge of doable if the Fed were to knock heads (which it won't). $200 billion is an obvious complete non starter. And if the number really were any bigger than $15 billion (even a not-that-much-bigger $25 billion), this rescue discussion goes away. <br/><br/>So to me, the $200 billion is worth airing because it raises two questions: how far is the downside and it is worth having the officialdom spend any time trying to salvage them? The answers are crystal clear if meaningful elements of Egan's even more dire view are correct (I think they should be clear even at $15 billion, but I seem to be in the minority). IA,

Yes and no. $15 billion is on the outer edge of doable if the Fed were to knock heads (which it won’t). $200 billion is an obvious complete non starter. And if the number really were any bigger than $15 billion (even a not-that-much-bigger $25 billion), this rescue discussion goes away.

So to me, the $200 billion is worth airing because it raises two questions: how far is the downside and it is worth having the officialdom spend any time trying to salvage them? The answers are crystal clear if meaningful elements of Egan’s even more dire view are correct (I think they should be clear even at $15 billion, but I seem to be in the minority).

]]> By: Independent Accountant http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200.html#comment-3307 Independent Accountant Fri, 25 Jan 2008 08:15:00 +0000 http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200-billion-to-retain-aaa/#comment-3307 I was first exposed to the monolines in July 2002 when Ackman published a 66-page piece on MBIA. After over five years of studying this industry, I suspect he knows it better than the regulators. That the regulators don't have a clue what they are doing is old news. If they did, they would not have chartered the monolines in the first place! <br/>Whether the monolines need $15 or $200 billion isn't important. What is: their business model makes no sense and never made any sense and they should be permitted to die an undignified death with the Big Three raters not far behind. I was first exposed to the monolines in July 2002 when Ackman published a 66-page piece on MBIA. After over five years of studying this industry, I suspect he knows it better than the regulators. That the regulators don’t have a clue what they are doing is old news. If they did, they would not have chartered the monolines in the first place!
Whether the monolines need $15 or $200 billion isn’t important. What is: their business model makes no sense and never made any sense and they should be permitted to die an undignified death with the Big Three raters not far behind.

]]> By: doc holiday http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200.html#comment-3305 doc holiday Fri, 25 Jan 2008 08:00:00 +0000 http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200-billion-to-retain-aaa/#comment-3305 Hey,<br/><br/>I think I found the money on the sidelines; this is amazing really!!<br/><br/>http://www.ici.org/home/mm_01_24_08.html#TopOfPage<br/><br/><br/>Retail: Assets of retail money market funds increased by $12.09 billion to $1.196 trillion. Taxable money market fund assets in the retail category increased by $13.06 billion to $906.85 billion, and tax-exempt fund assets decreased by $975 million to $289.49 billion.<br/><br/>Institutional: Assets of institutional money market funds increased by $52.33 billion to $2.055 trillion. Among institutional funds, taxable money market fund assets increased by $52.16 billion to $1.873 trillion, and tax-exempt fund assets increased by $177 million to $182.36 billion. Hey,

I think I found the money on the sidelines; this is amazing really!!

http://www.ici.org/home/mm_01_24_08.html#TopOfPage

Retail: Assets of retail money market funds increased by $12.09 billion to $1.196 trillion. Taxable money market fund assets in the retail category increased by $13.06 billion to $906.85 billion, and tax-exempt fund assets decreased by $975 million to $289.49 billion.

Institutional: Assets of institutional money market funds increased by $52.33 billion to $2.055 trillion. Among institutional funds, taxable money market fund assets increased by $52.16 billion to $1.873 trillion, and tax-exempt fund assets increased by $177 million to $182.36 billion.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200.html#comment-3303 Anonymous Fri, 25 Jan 2008 06:43:00 +0000 http://www.nakedcapitalism.com/2008/01/egan-jones-bond-insurers-need-200-billion-to-retain-aaa/#comment-3303 Yves, I'm not entirely convinced Egan-Jones has benefited from cooperation and/or access. If anything, I suspect the opposite is the case: what benefit would a company derive from spending quality time with E-J vis-a-vis investors or the Big 3 agencies? I do, however, think they've benefited from not having the same conflicts of interest as their rating-agency peers, as well as from not having the "downgrade=disaster" albatross around their necks because pension funds etc. don't have E-J ratings incorporated into their investment policies or guidelines.<br/><br/>What seems clear from the Pershing Square analysis is that, whether they're talking their book or not, they've given a lot of thought to all of the nuances surrounding the monolines - the nuances which just weren't deemed relevant by the agencies when the monolines were only insuring munis, or when real estate was in a bull market and CDO losses were unthinkable. Ackman's been short the monolines for, what, 5 years? I'm guessing he knows the industry better than almost anyone - and, sadly, that's likely to include insurance regulators, who are (understandably) used to assessing identifiable risks like, say, death.<br/><br/>That said, you are doing a tremendous service with your coverage of this debacle. I'm clearly not alone in this sentiment. Yves, I’m not entirely convinced Egan-Jones has benefited from cooperation and/or access. If anything, I suspect the opposite is the case: what benefit would a company derive from spending quality time with E-J vis-a-vis investors or the Big 3 agencies? I do, however, think they’ve benefited from not having the same conflicts of interest as their rating-agency peers, as well as from not having the “downgrade=disaster” albatross around their necks because pension funds etc. don’t have E-J ratings incorporated into their investment policies or guidelines.

What seems clear from the Pershing Square analysis is that, whether they’re talking their book or not, they’ve given a lot of thought to all of the nuances surrounding the monolines – the nuances which just weren’t deemed relevant by the agencies when the monolines were only insuring munis, or when real estate was in a bull market and CDO losses were unthinkable. Ackman’s been short the monolines for, what, 5 years? I’m guessing he knows the industry better than almost anyone – and, sadly, that’s likely to include insurance regulators, who are (understandably) used to assessing identifiable risks like, say, death.

That said, you are doing a tremendous service with your coverage of this debacle. I’m clearly not alone in this sentiment.

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