8 Banks Join to Rescue Bond Insurers

By: TraderMark Friday, February 01, 2008 2:39 PM

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And yet another bailout. This one seems legit. The irony of it is the parallel of you, I, our neighbors, and our every person insured say for example, under Blue Cross, having to pitch in and send money to Blue Cross so they can continue to insure us. That's how bad the situation has become.

Eight large banks have joined forces to seek a rescue plan for MBIA Inc (NYSE:MBI - News), Ambac Financial Group Inc (NYSE:ABK - News) and other troubled bond insurers battered by the global credit c
The $2.5 trillion bond insurance industry is struggling with mounting losses and capital shortfalls, jeopardizing the "triple-A" credit ratings that insurers such as MBIA and Ambac depend on to function normally.
CNBC said the eight banks are Barclays Plc (LSE:BARC.L - News), BNP Paribas (Paris:BNPP.PA - News), Citigroup Inc (NYSE:C - News), Allianz's (XETRA:ALVG.DE - News) Dresdner Bank, Royal Bank of Scotland Group Plc (LSE:RBS.L - News), Societe Generale (Paris:SOGN.PA - News), UBS AG (VTX:UBSN.VX - News) and Wachovia Corp
(NYSE:WB - News).
Unless the market or the insurers stabilize, investors may unload hundreds of billions of dollars of bonds, raising borrowing costs and ultimately burdening taxpayers. It could also result in hundreds of billions of dollars of additional write-downs at banks worldwide, analysts have said.

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