You are right that someone will probably pick up (or reinsure) the muni exposures. But that is cherry-picking. Munis rarely default and insuring them was a sensible business (although the margins did suffer from some compression).

But that isn’t the problem that needs solving. It is the guarantees on CDOs, home equity loans, and other structured credits that have the markets freaked out and will inflict more damage on the financial services industry. Extracting a little cash for the muni portion won’t do much to fill the gaping hole.

No one is talking about using tax dollars at this point. And the banks that Dinallo is talking to are being asked to perform the bailout, not receive it.

Isn’t there a scenario where somebody swoops in and provides AAA coverage for the choicer parts of the monoline portfolios: the munis with relatively sound underlying finances etc.?

Oh, puh-lease. They should consider themselves lucky Dinallo wants to talk to them at all.

I have yet to read a compelling argument FOR bailouts. Fiscal stimulus like extending unemployment, increasing availability of food stamps, etc – crystal clear.

Bailout idiotic decision making? Clear as mud.

Give me 5 good reasons I should care enough about Wall Street to use tax dollars to bail them out when they’ve done absolutely nothing but support a corrupt business environment where traders squeal in glee when ‘Grandma Millie’ gets screwed on her electric (Enron).

They’re going to continue to screw everyone no matter what happens. So lay it out there. Why should we really care? Why do they even deserve a bail out?