Monoline municipal bond insurers deserve separate attention. Big news is slipping through the cracks during this crisis. This article examines a lawsuit filed by San Francisco against top 5 muni bond insurers for scheme fraud. They claim of scam goes like this:
The insurers were in trouble with their other investments. They went to credit rating agencies and ccolluded to lower the credit ratings of cities like San Fran. When the ratings dropped from AAA to AA or A, the city would have to buy insurance to get the rating back up. A shakedown without a fundamental cause other than the insurers need for new premiums because of their deteriorating balance sheet, says San Francisco. See here.
THE DEVIL IN THE DETAILS: Amazingly, federal law shields the rating agencies from suit, according to the article, therefore, only the bond insurers could be sued. But, more suits are being filed anyway and the first amendment opinion theory will be tested . See here.
In separate but related news, the bond insurers are suing the mortgage companies claiming securitization fraud. See here.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment