Wednesday, August 6, 2008

More Toxic CDO fallout

Ambac, Using an Accounting Change, Posts Net Income

"Ambac Financial Group Inc., the bond insurer that lost 92 percent of its stock market value in the past year, posted second-quarter net income after using an accounting change to record a $5.2 billion gain related to its debt securities". "Claims on Collateralized Debt Obligations -- responsible for $492 billion in credit losses and asset writedowns at financial firms worldwide -- will rise to $1.1 billion at Ambac, taking likely impairments to more than $3 billion, the company said"

Posted by alan @ 06:43 PM (533 views)
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4 thoughts on “More Toxic CDO fallout

  • If the full article has to dress up their accounting procedures in so much newspeak babbling, it comes as no surprise the markets are in a mess.

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  • Incredible!!! A loss is not a loss…it’s a profit. A guarantee is no longer… when we buy ourselves out of it.

    We are a credit rating agency … trust us.

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  • A rise in the risk premiums on Ambac’s own debt in the second quarter lowered the value of bond guarantees, which was allowed to be reflected as a gain under new accounting rules, resulting in the quarterly profit.

    All together now: “A RISE in the RISK PREMIUMS on Ambac’s own debt lowered the value of bond guarantees, which was allowed to be relected as a GAIN under new accounting rules, resulting in the quarterly profit.”

    Who allowed this rule change? Please report to the office of housepricecrash.co.uk for cross examination.

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  • Whiteknight. I like the cut of your jib. Your last sentence suggests a new way of expressing democracy. We could have an online scoring system to control the lunacy of government.

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