Yesterday, the two big bond insurers got what they wanted, but the victory now looks Pyrrhic. MBIA and Ambac both asked rating agency Fitch to stop issuing ratings after the rating agency was the first of the major scorekeepers to downgrade them below AAA. Fitch has decided to withdrew ratings, since the monolines are denying […]
Read more...Even though the Fed has cut short term rates, those in the real estate business know too well that mortgage rates are rising. What is worse, an article in Bloomberg suggests that despite price declines, housing has become less affordable. In other words, even with the drop in purchase prices, the monthly cost of mortgage […]
Read more...The Financial Times reports on a new, troubling credit crunch phenomenon. Companies carrying a lot of LBO-related borrowings walk a tightrope since the high debt burden gives them little room for error. But in this downturn features an unanticipated rises in raw materials, plus in some cases, cuts in credit facilities that were important buffers. […]
Read more...The Fed’s decision to stay on hold with interest rates is an indirect acknowledgment, despite some brave talk otherwise, that the banking system is plenty fragile (has everyone forgotten that the Fed facilities are a form of life support?) and the concomitant economic downturn may only be in its early innings. There have been some […]
Read more...When Pilate saw that he could prevail nothing, but that rather a tumult was made, he took water, and washed his hands before the multitude, saying, I am innocent of the blood of this just person: see ye to it. Matthew 27:24 It no doubt sounds extreme to compare the SEC’s proposed changes in regulation […]
Read more...Although a Bloomberg article, “Bernanke Plays `Dangerous Game’ Balancing Rate Talk With Action,” focused on the Fed’s rate dilemma, it also in passing revealed a sharp difference of opinion on the central bank’s likely actions later this year between economists and market participants: While Bernanke’s warning that the Fed will “strongly resist” a jump in […]
Read more...A comment in the Financial Times, “Our need to sustain the ‘great moderation’,”by Stephen Cecchetti, professor of global finance at Brandeis, set my teeth on edge. I suspect many readers will react the same way. Let’s start: The US housing market has collapsed, placing severe strains on the financial system and, as a direct consequence, […]
Read more...The story in today’s Financial Times, “Bond insurers want $125bn of cover wiped out,” seems more that an tad inconsistent with bond insurers’, particularly MBIA’s, claim that everything is hunk-dory with their financial condition and contention that the rating agencies were mean and capricious. The story in brief: Bond insurers such as Ambac, MBIA and […]
Read more...In the anxious January/February period, when New York Insurance Superintendent Eric Dinallo made Herculean efforts to come up with $15 billion for MBIA and Ambac, it was a high-stakes drama, since it was assumed that the loss of the AAA ratings would End the World of Finance As We Know It. Now that the once-unthinkable […]
Read more...Warning: the post below is a bit geeky. Readers might start with our other current MBIA post and then return here for further details. Please also note that due to a reader catching an error I have looked further into the concept of claims paying resources and made considerable modifications to the paragraphs relating to […]
Read more...As readers probably know by now, Moody’s, the last holdout on the AAA rating for the two big monolines MBIA and Ambac, downgraded both companies earlier today, and more harshly than Standard & Poor’s. And even with this downgrade, it underscored that more cuts are likely to be in the offing Per Bloomberg: MBIA’s MBIA […]
Read more...Felix Salmon and I see the contretemps between MBIA and the New York Times quite differently, as our posts (and e-mail exchanges) illustrate. I like Salmon, but ironically, the way we got to know each other was when he savaged a Gretchen Morgenson piece, and I took issue with some of his arguments, so this […]
Read more...Citigroup’s latest discussion of its business prospects belies the idea that the credit markets are on the mend. From MarketWatch: Citigroup Inc. Chief Financial Officer Gary Crittenden said Thursday that the bank faces continuing credit problems in the second quarter, with credit costs rising, provisions for bad consumer loans growing and “substantial” write-downs for subprime […]
Read more...Let’s start with some admissions: Gretchen Morgenson, one of two authors (the other is Vikas Bajaj) of a takedown piece on MBIA yesterday, has some detractors in the blogsphere because, frankly, her understanding of credit instruments leaves something to be desired. Her critics overlook her solid work on executive comp and corporate malfeasance. When she […]
Read more...Well, Ambac seems to be resorting to a strategy popular among those in denial:rather than admit you need to lose weight to stave off a heart attack, throw away the scale instead. Ambac has decided to fire Fitch as one of its rating agencies. And why is that? Well, Fitch had the bad taste to […]
Read more...