No new business for ambac and mbia from now on? http://www.bloomberg.com/apps/news?pid=20601009&sid=acDDWaycQaeg&refer=bond
I have no interest in this topic as Dinallo is a pint sized Spitzer who sticks his nose in stuff where it doesn't belong. Funny thing that never gets mentioned was that soon after Dinallo "negotiated" a $1.4 billion deal with wall street, he went to work with one of the firms. Could he have "negotiated" more ? $1.4 billion with a cushy job at MS or $1.6 billion and I keep working for $150,000? Will he soon be working for the bond insurers? Does he promise to not go to private sector firms he worked with for a period of years after his "service" to the state? Maybe Eliot needs to answer these sort of questions?
FLASH: Warren Buffett Tells CNBC He Has Plan for Bond Insurers Posted By:Alex Crippen Topics:Credit | Municipal Bonds | Warren Buffett Sectors:Insurance Companies:Ambac Financial Group Inc | MBIA Inc | Berkshire Hathaway Inc. Warren Buffett tells CNBC this morning that he has a plan to help the troubled bond insurers. In a live telephone call to Squawk Box just a few minutes ago, Buffett offered to reinsure $800 billion in municipal bonds now insured by Ambac, MBIA and FGIC, effectively giving them a AAA credit rating. Buffett tells us he sent that offer to the bond insurers last week, and that he's giving them 30 days to find a better deal. Buffett says one bond insurer turned him down, and he hasn't yet heard from the other two.
I'm thinking Dinallo will twist their arms. He'll probably force these companies to provide a viable alternative plan if they refuse to take the deal.
I wonder why buffett is offering a 50% premium for the insurance cashflows. guess he is spending the money to build the name and take over the market in one day
Buffett Offers to Assume Muni Liabilities of Insurers (Update1) By Emma Moody Feb. 12 (Bloomberg) -- Warren Buffett, the billionaire investor, said he offered to reinsure $800 billion of municipal liabilities of MBIA Inc., Ambac Financial Group Inc. and FGIC Corp. One company turned down the offer and the two others haven't responded, Buffett, chairman of Berkshire Hathaway Inc., told CNBC television. Buffett said the proposal doesn't include the subprime-mortgage related securities that caused more than $5 billion in losses last quarter. ``It would solve it in one stroke of a pen,'' Buffett said. ``Our proposal puts the municipals at the front of the line.'' Berkshire would put up $5 billion as part of the plan, Buffett said. The bond insurers lend their AAA rating to $1.2 trillion of municipal debt, the rankings of which would be thrown into doubt if they were downgraded. If the debt was reinsured by AAA rated Omaha, Nebraska- based Berkshire, the municipalities would also retain the top rating, Buffett said.
these folks on CNBC seem to be missing the big picture. The survival of the bond insurers is irrelevant to the market now. If you rope off the munis your remove the biggest risk to the market - CONTAGION. Hell the CDO's are already smoked. That damage is done.
panic selling on abk and mbi. looks like the market is coming to realize that 2+2 is not 5. someone will pay for cdo losses