Two from MarketWatch and a teaser from CapitalStool.
Bond insurers may reject $800 bln reinsurance offer, Ackman, Chanos say
...The offer excludes the bond insurers' structured finance businesses, which have billions of dollars of exposure to complex mortgage-related securities known as collateralized debt obligations (CDOs). The market is increasingly concerned that losses on this part of the business will threaten bond insurers' crucial AAA ratings. But some companies have argued that short-term, market-based losses on these guarantees won't turn into very large actual losses.
"He's calling the bond insurers' bluff," said Bill Ackman, head of Pershing Square Capital Management LP, a hedge fund firm that's been shorting, or betting against, shares of MBIA and Ambac....MORE
Warren Buffett's letter to bond insurers
Below is the text of the letter sent by Ajit Jain, president of Berkshire Hathaway Reinsurance, to MBIA's bankers at Lazard Ltd.
Nonetheless, we are ready and willing to lend our reinsurance support to the municipal side of the house, and in fact had set out in a letter to the New York Superintendent of Insurance a concept that we believe would address the needs and concerns of main street America's municipalities. The Superintendent has no objection to our approaching you with this proposal. We would like to meet with you and your client, MBIA, to discuss whether MBIA would have any interest in the proposal .
Sheriff Calls Their Bluff
In another in our series The Best of Capitalstool.com, stoolie Jimi gives us the story behind the story of Warren Buffet’s offer for the muni bond business of the monoline insurers.
Interesting exchange on the Buffett offer on crapvision. I didn’t hear the original phone call, but Beckie Quick seemed to indicate that Buffett has only thrown a line to the munis, in part, because the monolines maintain that the non-muni market still retains value. Since Buffett can’t evaluate that claim, he won’t offer to reinsure those, too - he can only offer the reinsurance to that which he understands, and when the munis are trading n a manner that suggests that they no longer possess the AAA wrapper, then there’s an opportunity for someone like Buffett.
It seems clear that the monolines can’t jettison their low risk business to defend and support their high risk business. Which is why Buffett’s offer is likely DOA. But here’s the thing as I see it - Buffett is calling the monolines’ bluff on their claims of value for the non-muni portion...MORE