Category Archives: Credit markets

Monoline Downgrade Fallout: Muni Prices, MBIA Collateral

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 […]

MBIA Downgrade Increases Collateral Requirements; Clarification on CDS Acceleration in Insolvency/Custodianship (Corrected and Updated)

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 […]

On the MBIA, Ambac Downgrades; Regulatory Comments on MBIA

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 […]

More on the MBIA/NYT Slugfest

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 […]

Citigroup Sees Substantial 2Q Writedowns, Rising Credit Costs

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 […]

MBIA Lies in Attack on New York Times

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 […]

Ambac Tells Nasty Fitch to Go Away As Shorts Vindicated

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 […]

Paulson & Co. Founder Says Credit Losses May Exceed $1.3 Trillion

John Paulson, of the eponymous hedge fund Paulson & Co., contends that the credit contraction has run only about 1/3 of its course as far as writedowns are concerned. He anticipates that the total credit losses will reach $1.3 trillion, which exceeds the IMF’s forecast of $845 billion. Paulson, who made a spectacularly successful bet […]

MBIA Refuses to Downstream Cash, Uses CDS Fears to Defy Regulators

Let me tell you, if we have a revolution in the next decade, one of the triggers will have been the flagrant disregard shown by big players like MBIA for regulations, legal commitments, and fair dealing. I’m not surprised to see financially oriented sites calling for mass protests (but not yet against bond guarantors). The […]

Quelle Surprise! Wall Street Journal Downplays EU Calls for Tougher Rating Agency Regulation

I’ve had less cause of late to criticize the Wall Street Journal as the paper has made strides in its coverage of the credit markets. However, today’s paper has a story in which ideology appears to have compromised its reporting. Today Charlie McCreevy, EU internal markets commissioner, is to outline proposals for closer, tougher oversight […]

AIG’s CEO Sullivan Resigns; Willmustad Named CEO

In a board meeting where it was believed that Martin Sullivan, AIG CEO, would resign, the expected took place. Robert Willmustad has been designated CEO of the insurer. From the Wall Street Journal: Robert Willumstad, a former Citigroup Inc. executive and chairman of the board of American International Group Inc., has been appointed chief executive […]

ECB: "Litterbin of the Last Resort"

We’ve read from time to time that European banks have been launching deals, and not particularly good ones at that, solely for the purpose of using those securities as collateral for loans from the ECB. However, we hadn’t seen a longer-form treatment of that phenomenon. The Economist has decided to step into the breach. The […]

Baum: Fed’s Hawkishness Overrated

A solid column from Bloomberg’s Caroline Baum on what she sees as the market’s irrational expectations for the Fed. Key points: Investors focused on Bernanke’s remarks about inflation and the dollar, when he also stressed the less than robust growth outlook The last time the central banks said it saw inflationary risks predominating it wound […]

Goldman Sells Dutch Buyout Loan at 27.5% Discount

While this Bloomberg story notes that the bath Goldman took on a leveraged loan to Dutch TV producer Endermol was considerably below recent LBO loan haircuts (27.5% versus the typical

Monoline Death Watch: MBIA Continues to Put Executives First, Refuses to Downstream Cash to Insurance Sub

MBIA’s conduct continues to be shameful, yet the company is not getting the pillorying it deserves, at least from the media. Its latest bit of misbehavior: the company has reversed itself on its decision to remit $900 million of the proceeds of highly dilutive fundraisings to its insurance subsidiaries. Why might that be? Well, the […]