Yup. Which means the banks have to totally right the ship to make it worthwhile. Otherwise we may go to run off which abk shareholders seem willing to risk.
Its like all the insurers take these lines off each other "the economy is strong and the congress should not raise taxes on the american people" http://ir.ramre.bm/releaseDetail.cfm?ReleaseID=291678
"ABK Follow Up: CNBC commentator says that bail out of Ambac could be a pure muni bond bail out (12.49 -0.70) -Update- As mentioned at 12:13, CNBC commentator says that he is hearing that the consortium of banks that are trying to bail out ABK could possibly only back up muni bonds insured by ABK only, not CDOs. Says banks that are part of this consortium are capital constrained, so if they put up a line of credit for these muni bonds, chances are it wont be used. Says this is one of the ideas going around at one for the big banks. Commentator still questions if this can get done, but notes that these banks are still working on it." Man this might work but the shareholders might be crushed. they will give away the good business and hold the bad, what do you think cdn
I've got an idea where these guys can put their bonuses. ... Well, make that two ideas. http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-22755436.htm Ambac CFO, other execs get 2007 bonuses February 04, 2008: 09:05 AM EST NEW YORK (AP) - Bond insurer Ambac Financial Group Inc. (NYSE:AKT) (NYSE:AKF) (NYSE:AFK) (NYSE:ABK) on Monday said it paid out $3.05 million in cash bonuses to four of its top executives in 2007, according to a regulatory filing. Ambac has struggled in recent months as ratings agencies worry the insurer might not have enough capital in reserve to cover future potential losses. Fitch Ratings downgraded Ambac in January to 'AA' from 'AAA,' while Moody's and Standard & Poor's (NYSE:MHP) both said they are reviewing bond insurer ratings. Bond insurers typically need 'AAA' ratings to continue booking new business. Senior Vice President and Chief Financial Officer Sean Leonard received a $700,000 bonus and William McKinnon, a senior managing director of credit risk management, got an $800,000 bonus, according to a filing with the Securities and Exchange Commission. John Uhlein, an executive vice president who oversees securities, emerging markets and structured insurance received a $750,000 bonus, while Executive Vice President Douglas Renfield-Miller received an $800,000 bonus, Renfield-Miller oversees Europe and Asia-Pacific operations. All four also received stock options and restricted stock unit awards for 2008. The stock options vest in three installments between 2009 and 2011, while the restricted units vest in three years. Shares of Ambac have plummeted in recent months over concerns its business could be drastically reduced because of downgrades or the company could become insolvent. Shares of Ambac have fallen 52 percent since the beginning of December and 82 percent since the middle of October.
They have to do something that keeps ABK's rating @ AAA. So if they only reinsure the munis and the rating agencies give ABK a AAA rating it should be a positive for the stock. I dont so how they could only reinsure the munis and live with ABK getting downgraded. Doesn't make sense. There's a good chance everyone just walks and lets the cards fall where they may. Too many unknowns built into the future. Wilbur Ross said his crew was spending zillions of hours analyzing these portfolios. So everyone else is in the same boat. Time seems to be running out. I wouldn't be surprised to see more downgrades @ any time.
I understand that. but the triple A is not worth much if they are left alone with the CDOs and estimated losses of $10B with little or NO income to use loss tax offsets against. even triple A they should get very little new business, almost certainly not enough to make full use of tax deductions due losses or to make enough new money to keep paying the losses, the reputation loss of needing a bailout could very well shut them down of getting muni business for years If investors realize this they will see that the company will be in de facto run-off even if not officially and the losses will mount which will eat the book value
Hey I didnt' say it made sense Who can make sense of any of this besides these bogus rating agencies!
"The total amount of capital credit that we get for reinsurance ranges from $1 billion to nearly $2 billion depending on which rating agency model you are looking at." the cfo of mbia said on the conf call. channel re and ram re are about go bust and account for most of that capital credit, I just dont see how moodys wont downgrade them and then marty whitman will puke as mbia will be forced to essentially give away the company if they want to raise anything
Did you listen to Ross? Doesn't sound to positive or concrete. I think these big boys don't understand how little time they have. Trying to talk up the market is fine when markets are oversold. But frankly I think it's to late to do anything now. The problem is just too big to deal with in the time available. Just look at northern rock. They are still arguing over that after 6 months!