Thain Says Industry Wide Bond Insurer Rescue Unworkable

In an interview with the Financial Times, Merrill CEO John Thain said that he didn’t believe an industry-wide approach to rescuing the bond insurers would succeed. Thain instead advocated investments on a company by company basis. But the estimates of loss exposures are now coming in so high that it is difficult to conceive that any private entity, even ones who will take losses if the guarantors are downgraded, would see this as an attractive opportunity.

From the Financial Times:

John Thain, Merrill Lynch’s new chief executive, said he expected individual credit insurers would receive capital infusions from investors, but that it would be difficult to craft an “industry-wide” bail-out for the beleaguered guarantors.

Mr Thain said an effort by New York state regulators to help leading bond insurers maintain their credit ratings was raising interest in the sector on the part of investors including private equity groups and specialists in distressed companies.

However, he said in an interview with the Financial Times on Wednesday that getting banks to agree on a single approach was unlikely because they have different exposures to the credit insurers and varying opinions on what should be done.

“I think that’s very hard to get a transaction put together across the whole industry. I think it’s more likely you’ll have a company by company solution,” Mr Thain said.

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One comment

  1. Anonymous

    hello?? No kidding…Dinallo is totally clueless…another headline grabbing amateur politician who loves to take credit for things he can’t possibly accomplish. Eric Dinallo, the NY Superintendent of Insurance, who was formerly on Spitzer’s attack team when he was AG, until he went through the revolving door to work at Morgan Stanley as a compliance MD, is now trying strong arm the commercial banks to prop up the Bond Insurers??? What a farce! It will never happen and the markets will crash because of his misguided headline-grabbing antics!

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