Global Investing

Main menu:

Currency Converter


Site search

Categories

  • Subscribe


    Feed
    addtomyyahoo4
    Subscribe in NewsGator Online
    Add to My AOL
    Subscribe in Rojo
    Subscribe with Bloglines
    Add to netvibes
    Add to Google

    Add International Investing to Newsburst from CNET News.com
    Add to SiteShuffle
    Subscribe in FeedLounge
    Subscribe in Bloglines
    Bitty Browser
    Subscribe in NewsAlloy
  • Archive



    Insurers to Banks: Swap Guarantees for Nothing

    Let’s say you file a claim with the insurance company after a disaster. Instead of getting a check, the insurance company tells you that it would prefer NOT to pay the claim since that would put the insurance company in a precarious financial position. What would your reaction be? Some banks are confronting a similar question with their CDS insurance.

    Bond insurers such as Ambac, MBIA and FGIC are talking to banks about wiping out $125bn of insurance on risky debt securities in what could be the only way to limit the damage surrounding the bond insurers.

    Discussions about “commuting” these insurance contracts, which were sold by bond insurers to banks in the form of credit default swaps, have taken on a renewed sense of urgency amid a rash of ratings downgrades in the bond insurance, or monoline, sector last week.

    If agreements are struck about the value of the CDS contacts - and the discussions could take months - it could be significant for the entire financial system, which is clogged up by the uncertainty around the value of derivatives and complex bonds linked to mortgage-backed securities.


    Share this article: del.icio.us | Digg it | Netscape | reddit | Yahoo MyWeb |

    Write a comment