Thursday, January 31, 2008

Whoopsie

MBIA, Ambac May Each Lose $11.6 Billion, Ackman Says (Update4)

Fitch today downgraded Financial Guaranty Insurance Co., the world's fourth-largest bond insurer, two levels to AA from AAA, after the company failed to raise capital. Earlier this month, Fitch also cut Ambac Assurance Corp. to AA from AAA, and Hamilton, Bermuda-based Security Capital Assurance Ltd.'s XL Capital Assurance and XL Financial Assurance five steps to A.

Posted by lvmreader @ 12:37 AM (170 views)
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3 thoughts on “Whoopsie

  • How about this for an easy way out of this particular mess: There are all these funds whose rules force them to only buy AAA-rated bonds. What if the government makes them relax their criteria and accept AA bonds too? Is that possible? Stretching the limits of my financial / regulatory knowledge here.

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  • @drewster,

    That would be a brilliant (and simple) way out. These “ratings” are but opinions anyway. But the thing is, it would be admitting that it was all a pile of baloney to begin with. And how could S&P and the others have justified their bulls**t fees.

    A bit like asking governments to relax taxi rules on fares rather than requiring everyone to do complicated calculations which were arbitrary from the offset anyway.

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