It sure is Friday.

Could be a long weekend too for some.

Then AAA--....then AAA-----,....

How would a writedown of $75 billion effect the health of the big banks?

Well it won't be today, it will be tonight.

And when are those FDIC 155mm rounds gonna start landing?

Is that from Charlie Gasparino? Clown.

yawn wake me when it happens. I think this will be a long, drawn out process to put the rating to where it actually should be...something just north of junk.

gn,

I'm nervous too about my SKF: CNBC's Dennis Kneale said something along the lines of, "I have to ratchet my expectations of this market down".

When the silliest cheerleader of the them all gets nervous, it probably is time for a bear rally. These ass clowns are outstanding reverse barometers.

Just as a reminder, The S&P 500 is still at least 4% overvalued and thus in terms of future value, re-valuations related to economic reality will have to be related to increased interest rate yields and increased earnings growth, two situations which will not occur within the next several years! The Fed is already talking about ramping rates back up, but earnings growth and a recession will result in a liquidity trap which could last several years. There is not a buying opportunity ahead IMHO, what lies ahead is an opportunity to keep your powder dry and then cost average step-by-step down the road, after the smoke clears and the blood is dry in the streets. Catch a falling knife in the next year and you will pay a price!

JS: look at GLD and FXY

I bought both today

MBIA Chief Executive Jay Brown said in a statement that 'it has become clear that MBIA and the other members of AFGI no longer share a common vision for the industry. For one thing, we believe that the industry must over time separate its business of insuring municipal bonds from the often riskier business of guaranteeing other types of securities, such as those linked to mortgages.'
Brown also said the company disagrees with AFGI's positions on the 'appropriateness of monoline financial guarantors insuring credit default swaps and the ability of U.S. financial guarantors to reinsure U.S. domestic financial guarantee insurance transactions with foreign affiliates without paying U.S. corporate tax rates.'
Brown added that 'now it is up to us to shape our future in a way that we believe is most responsive to the markets, our policyholders and our owners, and we must do so without the constraints of participation in an industry association that does not always share our views.'
Shares of MBIA fell 2% to $11.93.

FYI:

Date of Hearing: April 27, 2005

ASSEMBLY COMMITTEE ON INSURANCE
Juan Vargas, Chair
AB 1661 (Horton) - As Amended: April 4, 2005

SUBJECT : Financial guaranty insurance

SUMMARY : Generally revises and recasts the provisions of law
regulating financial guaranty insurance. Specifically, this
bill :

COMMENTS : The purpose of this bill, according to the sponsor
Association of Financial Guaranty Insurers (AFGI), is to conform
California's law to New York's financial guaranty insurance law,
which served as the model when California enacted its law 15
years ago.

In particular, the bill would broaden the underwriting authority
of financial guaranty insurers licensed under the Code to
provide their irrevocable and unconditional guarantees on
highly-rated debt obligations; broaden the definition of
collateral to permit financial guaranty insurers to purchase
credit protection in the form of credit default swaps as defined
in Code section 1211(a)(4), and recognized as appropriate for
sophisticated insurers; clarify the Code as it applies to
financial guaranty insurers that insure credit default swaps
obligations, which provide for payment upon occurrence of
certain credit events, such as default on specified securities;

According to estimates
provided by the sponsor, municipal bond insurance saved U.S.
taxpayers approximately $2.3 billion in 2003. California
accounts for approximately ten percent of the business.

I know but the market has to keep thinking it NEEDS AAA for Buffet to get full effect, thus his offer to buy them out. If everyone accepts AA, then hell, I'll start insuring bonds.

Yearning to learn, that is only partly cynical. SOMEONE had to step up and provide the insurance or they'd be even bigger problems. So getting someone else into position isn't a bad thing. And Warren just happens to have the money and know the business.

So now the downgrade can happen and clearence can begin.

In yesterday’s ruling, the panel said, “Although by the insurance policy’s own terms FSA acquired the bonds upon default by the authority, we conclude that at the time of such transfer the instruments FSA acquired were no longer 'securities’ as required for standing under Rule 10b-5” of the Securities Exchange Act of 1934, which provides the legal foundation for securities fraud suits. The panel said FSA “did not acquire a 'security’ because, by the [official statement’s] own terms, FSA acquired no right to receive interest or principal in the bonds after disbursement.
Under the OS, once the bonds or a portion of the bonds were redeemed, the owners of such bonds or portions thereof ceased to be entitled to any benefit or security under the bond resolution.”
The ruling reverses the one the panel issued on May 31, 2006, in which the three judges had said that FSA “has standing as a purchaser of a contingent interest in the bonds” by virtue of its insurance policy. The panel had said that under its insurance policy, FSA “shall become the owner of the bond, any appurtenant coupon to the bonds or right to receipt of payment of principal or interest on the bond.” Stephens appealed that ruling.

Court Reverses FSA Ruling - Bond Buyer Breaking News Article

tj:

this is what Grinds My Gears: the agencies are not accountable to ANYONE! Yet as NSRO they get an oligopoly that prints money. It is a travesty!

Anonymous writes:
On Thursday MBIA quit the Association of Financial Guaranty Insurers, a trade group, after 22 years, due to disagreements over the right direction for the industry.

Huh? What does that mean??
Anonymous | 02.22.08 - 1:03 pm | #

It means MBIA could not afford the dues.

Rayonthefarm: D.B. Zwirn was ``the unfortunate victim of misconduct by certain former employees,''

LOL. As the head of the firm, he was not responsible for what his employees were doing...namely the CFO. All this stuff just gets funnier and funnier.

SC,

Don't know. I stated "legally defensible" because someone had suggested (a while back) that the agencies could be sued for rating garbage as investment grade. Be nice if true.

The Port Authority, which refers to all its variable rate debt as versatile structure obligations, plans to take out $200 million of its $700 million of ARS with commercial paper, the authority said yesterday following the disclosure of its intent to redeem those bonds in a material event notice. The authority is still weighing options for how to refund the remaining $500 million of ARS. "Our expectation is that we will be essentially out of this financial instrument within six to eight weeks," Port Authority executive director Anthony Shorris said. This is an awfully sound credit it's just an instrument that was not the right one. Shorris said the high maximum reset rate of 20% for the failed auction was set up last year "based on where the market conditions were at the time. Some other issuers had maximum failure rates pegged to a benchmark such as the London Interbank Offered Rate and have not seen such high interest rate resets even when auctions of their ARS failed. The Port Authority had a single auction failure which reset at 20% but its other auction rate debt reset as high as 15% last week...

The $330 billion ARS market has dried up overnight pushing up rates as high as 20% on some bonds – a new benchmark for short-term debt. Auction-rate securities are now headed for extinction just like the other previously-vital parts of the structured finance paradigm. The $2 trillion market for collateralized debt obligations (CDOs), the multi-trillion-dollar mortgage-backed securities market (MBSs) and the $1.3 asset-backed commercial paper (ABCP) market have all shut down, draining a small ocean of capital from the financial system and pushing many of the banks and hedge funds closer to default.

The price of insuring corporate bonds has skyrocketed in the last few weeks making it more difficult for businesses to get the funding they need to expand or continue present operations. Much of this has to do with the growing uncertainty about the reliability of credit default swaps, a $45 trillion dollar market which remains virtually unregulated. Credit-default swaps are a type of financial instrument that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent if a borrower fails to adhere to its debt agreements. When the price of CDSs increases, it means that there is greater doubt about the quality of the bond. Prices are presently soaring because the entire structured finance market – and anything connected to it – is under withering attack from the meltdown in subprime mortgages. As foreclosures continue to rise, the securities that were fashioned from subprime loans will continue to unwind, destroying trillions of dollars of virtual-capital in the secondary market.

idoc,

No, only caught this thread (so far). I'll have to catch up later. Sounds good, though!

In a February 7, 2008 statement, the Securities and Exchange Commission (the “SEC”) has clarified that issuers of insured municipal bonds must comply with their ongoing disclosure obligations if the ratings on those bonds are downgraded as a result of a downgrade of the bond insurer. A number of municipal bond insurers have been under scrutiny by the rating agencies recently because of their liabilities resulting from defaults in the subprime mortgage securities markets.

Most issuers of insured, fixed rate bonds issued after July 1995 have continuing disclosure obligations pursuant to SEC Rule 15c2-12 that require the issuer to submit annual financial information to certain securities information repositories and provide notice of certain events material to their bonds, including "rating changes." Based on the SEC guidance, if your bonds are subject to continuing disclosure requirements and are insured by a municipal bond insurer whose rating has been downgraded, then the rating on your bonds will also be downgraded and you must file a "material event" notice. Generally (but not uniformly), issuers of variable rate bonds do not have continuing disclosure obligations with respect to those bonds and are not obligated to provide such notice. If your bonds are uninsured, privately placed with a bank, or if you are otherwise exempt from the continuing disclosure requirements, this notice is informational only.

f any of your bonds are insured and you have ongoing disclosure obligations, you need to determine whether the bond insurer’s credit rating has been downgraded. If so, you need to determine whether the rating agency (or agencies) that rated your bonds is the same agency (or agencies) that downgraded the bond insurer. If so, your bonds will be expected to be downgraded accordingly, and then you will need to file a material event notice about the rating change of your bonds. Material event notices are only required if the rating on your bonds has been changed. Notices are not required in the event that an insurer is placed on watch or given a negative outlook. You can check the current ratings on the websites for the rating agencies: Sorry. Page not found. Sorry. Page not found. and FitchResearch We are currently aware of the following downgrades:

Yep - the Market always goes up 100+ points or so in the last half-hour on "good" news such as this. Praise to the Market! Praise! Markets always go up! Praise to the PPT for manipulating our way to prosperity!