The End of the Monolines

It looks like the end of the monolines to me. FGIC has already said it’s splitting – something which, legally, is fraught at best. Ambac is trying to raise $2 billion in new equity before, yes, splitting. And now MBIA has announced that it’s kicked out CEO Gary Dunton, replacing him with former CEO Jay Brown. Which is likely to be about as effective as reinstating Al Lord as CEO of Sallie Mae.

These are all desperate measures, taken in the face of implacable determination on the part of Eliot Spitzer to punish them harshly for letting their risky structured-products business ruin their cash-cow municipal insurance business. I don’t have an opinion on the monolines’ share prices, which could well be trading at a discount to the companies’ value in run-off. But I see very little chance at this point that these companies will be operating in their present form for much longer.

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