Ambac is now joining FGIC in the pursuit of splitting up of their business: On one side we have muni bonds and all that is good, and on the other side we have subprime and CDO's squared and all that is bad.
The theory is that the "bad" business is so bad, that those costs (their assurances notwithstanding) will bring down the "good" business with it. And by separating the businesses, at least we have something. And if housing prices resurrect, foreclosures stall, and "jingle mail" stops, then the other business could have something more than nothing. But nothing close to the something of the good business.
You would of thought this game of "Quick! Can someone think of something good?" would be appropriately a request for dinner, instead of the blueprint for the monolines survival. But I guess that what happens, when they eat their own cooking!
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