Great piece from Zerohedge:
As observant readers will recall, a week ago we pointed out a letter in which the New York Fed’s Steven Manzari instructed AIG to stand down on all discussions with counterparties on “tearing up/unwinding CDS trades on the CDO portfolio.” At the time we focused on the word “stand down” as an [...]
Don’t forget Credit default swaps..Also MBIA
FT.com
Banks and other investors face a bill of more than $1bn after a large US bond insurer became the first since the credit crisis struck to cease paying out claims, an event expected to trigger payouts on billions of dollars of credit derivatives.
Insurance regulators forced Syncora, the insurer that is [...]
Yahoo finance (AP):
President Barack Obama on Saturday announced a plan for federal workers to propose ways to improve their agencies’ and departments’ budgets. The president said employees’ ideas would be key as his Cabinet officials cut millions from the federal budget and trim the deficit.
“After all, Americans across the country know that the best ideas [...]
Martin Hutchinson writes: For frustrated investors looking to justify the ban of credit default swaps (CDS), look no further than last week’s corporate bankruptcies of Canadian newsprint producer AbitibiBowater Inc. (ABWTQ) and U.S. shopping center developer General Growth Properties Inc. (GGP).
In both of these cases, credit default swaps became an actual bankruptcy catalyst - for [...]
Citi “made” $2.5 billion on a derivatives position designed to profit when the companies own credit default swaps spreads widen.
Or, in plain English, Citi profited because it made a bet that the cost of insuring itself against a default would go up. The credit default swap market is the place where you can bet on [...]