Bond Insurer Rescue Package From Banks? (MBI, ABK)

Banking, finance, and taxes

Published: February 1, 2008 8:03 am

Last Updated: March 26, 2020 3:37 pm

Ambac Financial Group Inc. (NYSE: ABK) and MBIA (NYSE: MBI) are both trading higher in pre-market trading this morning. CNBC squeezed in a report after covering the Yahoo!-Microsoft that there are eight banks that have formed a consortium to rescue the ailing bond insurers.

MBIA is trading up roughly 12% to $17.50 and Ambac is trading up over 15% at $13.50 in pre-market trading. We noted before how "mergers may be mandated rather than preferred" and this would fall right into that coup and conspiracy. The counterparty risks are just too severe if one of these were to fail entirely. Goldman Sachs recently outlined the values of potential packages.

Forming this consortium may be the banks saving their own skin rather than them just coaxing a financial opportunity.

Jon C. Ogg
February 1, 2008

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