The thing is , the losses are there. Even if they let the CDO/structured pfolios go to Baa3, it doesn't matter, because later they will have to actually pay the losses, and the monlines are not equipped for this.
The question: is it cheaper to reserve against the losses in the insurance (hold capital only) model, or just pay them upfront in the bank( MTM, fair value) model. That's the difference between recapitalizing the monolines or bailing them out.
Entry: Bond Insurer Split: Worst Possible Outcome For Wall Street
posted by bizness
Feb 19, 2008 6:13PM
The thing is , the losses are there. Even if they let the CDO/structured pfolios go to Baa3, it doesn't matter, because later they will have to actually pay the losses, and the monlines are not equipped for this.
The question: is it cheaper to reserve against the losses in the insurance (hold capital only) model, or just pay them upfront in the bank( MTM, fair value) model. That's the difference between recapitalizing the monolines or bailing them out.