The hit on their CDO portfolio is $5.4B market to market loss 'approximately $1.1 billion represents estimated credit impairment related to certain collateralized debt obligations of asset-backed securities transactions' ' These transactions are backed primarily by mezzanine level subprime residential mortgage-backed securities that have been internally downgraded to below investment grade.' (meaning these cdos are truly turning bad,its not about just market to market anymore) but they are not worried about it, they only set aside $143m for expected losses, they are saying they can predict what the losses are going to be and 143m is their best guess, I dont think even your local realtor is that optimistic. the reason they are so optimistic is because if they werent, the loss provisions would raise their capital requirement to maintain AAA which would get them downgraded, so instead they just lie about future losses so they can keep the patient alive for a while http://ir.ambac.com/phoenix.zhtml?c=80774&p=irol-newsArticle&ID=1096985&highlight= also as sweetner the CEO is stepping down