Ambac/M

[zeroEthix]

The way I figure it is if you have enough passive/uninformed blind investors pumping their savings (401k or IRA) into funds, the market can NOT go down...

[A Student]

Originally Posted by axjoke

National City's 40% discount was rather amusing.

The interesting thing about the National City situation is that it had looked like they would be bought for several weeks. The going price must have been rather poor if they thought diluting existing shares by this much was the best thing for the owners (shareholders).

http://money.cnn.com/news/newsfeeds/...3_FORTUNE5.htm

CHICAGO -(Dow Jones)- Bond insurer Ambac Financial Group Inc. (ABK) has hired legal and forensic experts to examine 17 of its financial guarantee transactions covering residential mortgage-backed securities as performance deteriorates.

During its first quarter earnings conference call Wednesday, David Wallis, Ambac's chief risk officer, said the company is examining transactions that have performed much worse than expected.

Wallis suggested that one prime candidate for legal scrutiny is a deal with Bear Stearns Co. (BSC) it closed in April 2007. Another is a transaction with First Franklin.

Ambac originally projected that losses on the underlying collateral of the Bear Stearns transaction would be between 10% and 12%, but now expects losses at 81.8% of underlying collateral, a transaction that has seen an unexpectedly " rapid escalation of losses," and represents an outsized percentage of the insurer's expected credit impairment, Wallis said.

Some of the factors the company will examine include loan-level document review and a review of legal documents "focusing on representations and warranties," Wallis said. "Hypotheses are being built which involve fraudulent activity in various guises."

In recent months, both Security Capital Assurance (SCA) and FGIC Corp. have sued bank partners to cancel some financial guarantee contracts based on problems with the original agreements.

Michael Callen, the company's chief executive, said that in an effort to further increase transparency in its expectations, the company will add to its Web site some outside analysts' analysis of the company's potential losses.

"We don't endorse" some of the evaluations, Callen said, "but they do provide other data points, even if we do feel they are overly pessimistic."

One outsider who has argued Ambac and other bond insurers have underestimated their losses is hedge fund manager and short-seller William Ackman of Pershing Square investments, who estimated that Ambac Financial Group and MBIA Corp. ( MBI) are grossly understating their eventual derivatives losses.

Ambac's share price plummeted Wednesday as the company reported a net loss of $1.66 billion, or $11.69 a share, compared with year-earlier net income of $ 213.3 million, or $2.02 a share.

Shares of Ambac recently traded down 40% to $3.62.

Paging axjoke ...

[axjoke]

Originally Posted by Irish Blues

http://money.cnn.com/news/newsfeeds/...3_FORTUNE5.htm



Paging axjoke ...

I saw this and my first reaction was that it was interesting that Bear Stearns is listed. I wonder if any of this 29 billion in crap that the FED took from Bear is guaranteed by these contracts that Ambac is trying to weasel out of? I have to think that the fed would be more likely to roll over an let them out of the guarantee than BSC would have. This is purely speculation but it was certaintly intesting to see Bear's name mentioned.

[axjoke]

Stupid me... S&P already said the loss was within expectations and that Ambac is still AAA. I think credit protection is running around 7%.


"Ambac Net Loss Won't Lead to Downgrade, S&P Says (Update2)

By Christine Richard

April 23 (Bloomberg) -- Ambac Financial Group Inc. won't have its credit ratings cut by Standard & Poor's following a first-quarter loss that sent the company's shares down 43 percent.

``Ambac's reported losses were within our projected losses for Ambac as we reported in February,'' S&P Managing Director Dick Smith said in an e-mailed statement. ``Therefore, we are not taking any rating action at this time.''

Ambac's top AAA insurer ratings had been in doubt until last month, when a stock sale bolstered capital and kept the ratings companies at bay. Investor concern was reignited today after the company reported a first-quarter net loss of $1.66 billion, or $11.69 a share, revised claims estimates higher by $2 billion and said it may be in violation of at least one loan covenant.

The covenant violation on a $400 million credit facility, caused by impairments and writedowns reducing Ambac's net worth, isn't sufficiently concerning to cause a downgrade, Smith wrote. Ambac is working with its lenders to amend the terms, Ambac executives said during a conference call with investors.

``It is not a positive that access to the facility may be impaired but it is not a situation that justified any rating action,'' Smith wrote. ``Ambac has access to other liquidity resources that should be sufficient to meet any near-term claims- payment needs.''

The AAA ratings on Ambac's bond insurance unit, Ambac Assurance Corp., were affirmed last month by S&P after the company sold $1.5 billion in stock and equity units to cushion against losses. Ambac Financial, the holding company, also had its AA ratings affirmed. The outlook on both is still negative.

Ambac fell $2.57 to $3.46 today in New York Stock Exchange composite trading, its second-biggest one-day percentage drop. "

[axjoke]

Get out the AAA stamp of approval.


"MBIA slides to huge 1Q loss on hefty charges
Monday May 12, 7:08 am ET
MBIA falls to $2.41 billion loss on 1st quarter, writes down $3.58B derivative liabilities


ARMONK, N.Y. (AP) -- MBIA is posting a large first-quarter loss, as the struggling bond insurer took heavy charges to write down the value of certain liabilities amid continued deterioration in the credit markets.
Armonk, N.Y.-based MBIA Inc. lost $2.41 billion, or $13.03 per share, compared with year-ago earnings of $198.6 million, or $1.46 per share.

Revenue totaled a loss of $2.96 billion compared with revenue of $729.9 million a year ago, as net premiums written fell by nearly half and losses on insured derivatives soared to $3.58 billion.

Level 3 assets totaled $7.33 billion at March 31, representing about 22.5 percent of total assets."

[Shaft]

Originally Posted by axjoke

Get out the AAA stamp of approval.


"MBIA slides to huge 1Q loss on hefty charges
Monday May 12, 7:08 am ET
MBIA falls to $2.41 billion loss on 1st quarter, writes down $3.58B derivative liabilities

Surely now's the time to buy their shares.

[axjoke]

Originally Posted by Shaft

Surely now's the time to buy their shares.

Red means joking right? I see Ambac is down about 40% since the obvious buy day.

[axjoke]

As expected SP says MBIA still AAA. One interesting thing was that MBIA reported 50 million in exposure to Valejo, CA which voted to file bankruptcy. Will be interesting to see what exposure they have to the much larger jefferson county should it also default.


"No rating action on MBIA even after
swinging to huge Q1 loss - S&P
MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services
said it is not taking any rating action on MBIA Inc., even after the bond
insurer swung to a $2.41 billion loss during the first quarter, mainly
stemming from a $3.5 billion unrealized loss on insured credit
derivatives and a smaller amount of credit impairment on its
housing-related insured portfolio.
Ambac Financial Group Inc. recently reported similar losses and
impairments, S&P said.
The credit impairment that each company reported was much lower than
S&P's most recent subprime stress test losses for each company's insured
portfolio.
S&P does not view mark-to-market losses or gains on credit derivatives
for bond insurers as having a fundamental economic effect for the
purposes of capital adequacy and profitability analyses.
While the companies' reported impairments have come in below its stress
losses, given the unprecedented level of mortgage market deterioration
that has occurred, S&P said it remains circumspect about assigning stable
outlooks to insurers even if they have sufficient capital when measured
against projected stress case losses.
Accordingly, S&P said it maintains negative outlooks on MBIA and
Ambac due to their significant exposure to domestic nonprime mortgages
and the credit quality of their exposures."

Originally Posted by Shaft

Surely now's the time to buy their shares.

You forgot to add the obligatory, "this clearly shows the worst is behind us" comment.