Bad credit-related news continues, and if the Dow is any measure, the stock market response is subdued. Barclays estimates that the losses that banks would take due to bond insurer credit rating downgrades and the impact on the instruments they insured would be $143 billion if they are downgraded to single A (I find that […]
Read more...Despite New York insurance superintendent Eric Dinallo’s desire to move a rescue of bond insurers along with all possible speed, and the very real pressure of an imminent downgrade (note that Security Capital Insurance was downgraded five levels by Fitch yesterday from AAA to A), there was perilous little in the way of progress. Indeed, […]
Read more...Bill Ackman of hedge fund Pershing Square has gotten a considerable amount of flack for his outspoken, negative views of the bond insurers, particularly MBIA and Ambac, which his firm has shorted. Ackman has been circulating a detailed analysis that estimates that the additional equity needed to maintain an AAA rating at the two biggest […]
Read more...Mortgage servicing, a business about which most people were once blissfully ignorant, is increasingly getting less-than-good press. The latest sighting comes from Katie Porter at Credit Slips, who tells of pending litigation against Fidelity National, a big, behind-the-scenes player in the servicing game. Effectively, Fidelity was taking extra compensation that was unseen by bankruptcy judges […]
Read more...Ooh, either Wilbur Ross, a savvy investor in distressed assets, has completely lost his judgment with his advancing years, or he has been leaned on by the powers that be to look at this deal in the hopes that it might bring others to the table. But remember, Marty Whitman, another storied distressed investor, owns […]
Read more...I hate to be a nay-sayer, and I want to make it clear that it really would be for the best if New York State insurance superintendent Eric Dinallo could pull off a rescue of the troubled bond insurers. But as we pointed out, this is an uphill battle under the best of circumstances, and […]
Read more...George Magnus, the UBS economist who popularized the concept of a Minsky Moment and has been prescient in his bearish calls on the credit markets, veered today and, in a Financial Times comment, “More is needed to unblock credit arteries,” gave unqualified support for aggressive monetary easing. Put it another way, when mere New York […]
Read more...Eric Dinallo, the New York Superintendent of Insurance, is trying to orchestrate a rescue of on-the-ropes bond insurers and according to the Financial Times, has approached various unnamed banks for an immediate $5 billion and an ultimate sum which could be as large as $15 billion. Note that the Pershing Square estimate of capital needed […]
Read more...Sentiment has gotten so bad even among CEOs that there is reason to expect a bounce in equities in the not-so-distant future once frayed nerves have calmed a bit, particularly given the report in Bloomberg that Bernanke & Co. are much more sanguine about inflation and therefore are perceived to be ready to make further […]
Read more...It wasn’t enough that the Administration’s fiscal stimulus plan announced last Friday was sufficiently off beam so as to precipitate a global stock market rout. The Fed then put its credibility and some of its remaining firepower on the line to try reverse the gap-downward stock market opening with the in-panic-mode pre-session 75 basis point […]
Read more...If you had any doubts that credit market problems were a big part of the equity market panic of this week, a further reminder came this morning. As reported by Reuters, earnings at the Charlotte bank fell 95% due to over $7 billion in writedowns and reserves for losses. Earnings were 5 cents a share, […]
Read more...My only comment on the attempt to alleviate concerns about the statement on the $45 billion credit default swaps market by the International Swaps and Derivatives Association: while the logic of Bill Gross’ $250 billion loss estimate was subject to question, there doesn’t appear to be any analysis supporting what amounts to an assertion by […]
Read more...The Fed accelerated what was its now expected level of rate cut, 75 basis points, from its scheduled January 29 Fed Open Market Committee Meeting to today, putting the target Fed funds rate at 3.5% and the discount window rate at 4%, The prospect of the S&P and Dow opening down appears to have focused […]
Read more...A reader provided a link to a post by Institutional Risk Analytics, which in turn cites a merger filing by Bank of America with respect to its plan to acquire Countrywide. The document details what can only be called a scheme by which Bank of America intends to acquire Countrywide (specifically, the FDIC insured entity) […]
Read more...A bit late to this item due to the holiday. Bond insurer ACA, which was in breach of its collateral requirements last week and therefore en route to being liquidated, received a stay of execution from teh Maryland insurance regulator, which gave the company until February 19 to wind down existing credit default swap contracts. […]
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