Bond insurers and the markets
Splitting headaches
Feb 21st 2008 | NEW YORK
From The Economist print edition
….The monolines know that, by threatening to break apart, they may force Wall Street banks to stump up the cash to keep them whole. The banks fear that stand-alone structured-product insurers, cut off from the municipal bit, could not pay all of their claims. This would drag down the value of securities the monolines have guaranteed and increase the banks’ write-downs….The regulator and governor are shedding no tears over lenders’ losses. Their primary concern is the $2.6 trillion, tax-exempt municipal-bond market, used by cities, universities and the like to raise long-term funds, much of it from individuals. Were the monolines to lose their top-notch ratings, they fear, many issuers could struggle to meet higher funding costs.

Municipal borrowers are already being affected by the lack of confidence in the insurers. Overall issuance was 38% lower in January than the year before—though other factors, such as the economic slowdown, were also to blame. …Because the interest rate automatically clicks up if the auction is a dud, hospitals, museums, universities and ports have suddenly found their debt-service bills rising sharply. New York state entities’ weekly borrowing costs have climbed by more than $2m, for instance. Some rates soared to 20%
http://www.economist.com/finan…..d=10733072

Auction-Bond Failures Roil Munis, Pushing Rates Up (Update5)
By Martin Z. Braun
Feb. 13 (Bloomberg) — Bonds sold by U.S. municipal borrowers with rates set through periodic auctions failed to attract enough buyers as banks including Goldman Sachs Group Inc. and Citigroup Inc. that run the bidding won’t commit their own capital to the debt.

Rates on $100 million of bonds sold by the Port Authority of New York and New Jersey, with bidding run by Goldman, soared to 20 percent yesterday from 4.3 percent a week ago
http://www.bloomberg.com/apps/…..refer=home

WOULD YOU LIKE WHIP CREAM WITH A CHERRY ON TOP?

Goldman, Bear Stearns Bankers Targeted in Muni Criminal Probe
By Martin Z. Braun and William Selway
Feb. 29 (Bloomberg) — Goldman Sachs Group Inc. and Bear Stearns Cos. bankers are under investigation in the U.S. Justice Department’s criminal probe of the municipal derivatives business, regulatory documents show….
U.S. prosecutors and the Securities and Exchange Commission have been searching for more than a year for evidence of rigged bidding and other misconduct by banks that sell investments and derivatives, such as interest-rate swaps, tied to municipal bonds. …. Lawyers in the municipal bond industry have said the criminal probe is the biggest in the history of the almost 200- year-old market, where states, cities and towns have $2.6 trillion of debt outstanding. The Federal Bureau of Investigation also raided three brokers that advise local governments and ran the bidding as part of the probe, which may involve transactions as far back as 1992. …Bear Stearns spokesman Russell Sherman, Goldman spokesman Michael DuVally and JPMorgan spokesman Brian Marchiony declined to comment
http://www.bloomberg.com/apps/…..refer=home

Spitzer may have been ensnared with his pants down. On the otherhand, look whose hands are still in the cookie jar that affects all of us. Quite interesting that Bear Sterns was given away via Paulson(grad of Goldman Sachs) with $30 billion taxpayer bailout from helicopter Ben and wrapped with a bow on top to JP Morgan who didn’t have the cash for the buyout. Instead worthless CDO’s that we the taxpayers will be handed. We need to roundup a posse and bring all the bank robbers to the justice tree.

It would be interesting to lay this timeline next to something like the Cunningham investigation, which also involved hookers, sex, and… but wait a minute, I don’t recall hearing the transcripts of Vitter’s hookers, or of Duke Cunningham’s ‘drive ‘em to the Watergate in a limo’ sexcapades…

oh… wait a minute!… I guess Cunningham and Vitter didn’t piss of Wall Street. Silly me….
Pfffttttt…!

As it turned out, both the North Fork Bank and HSBC had faced inquiries into their lending practices led by Mr. Spitzer when he was New York attorney general. In the case of North Fork, Mr. Spitzer announced a settlement in 2003 requiring it to refund more than $20,000 to dozens of homeowners and cease what he said was its practice of charging homeowners illegal fees.

This is from the link October/late fall in LHP’s post.

You sure EW couldn’t have done just as well with a case or REALLY GOOD BEER and an impromptu scrum, or scrim, or whatever you hot rugby babes call it?

Instead what she got was a REALLY GOOD TIMEline and an impromptu scum, or whatever …

For a really good timeline call xxx-xxxx.

Hey, what do you get a girl who has all the timelines she needs? Another timeline?

Happy Birthday EW.

Also, I read that when asked recently about what he thought interest rates should be, McCain was stumped, and then blurted out ‘zero’ after a moment.

If a Democrat were president and we were experiencing price inflation, the way we have been recently, then the interest rates would begin to creep up. I don’t know how the Fed decides how far to take them, but we know the direction.

Siegelman redux.

Someone replaced Siegelman (D) in Alabama?

Bruno (R) to replace Paterson (D) who replaced Spitzer (D) in NY.

I see a pattern developing and it isn’t Democracy.

”The governor has paid literally tens of thousands of dollars for these services. It is Mr. Stone’s understanding that the governor paid not with credit cards or cash but through some pre-arranged transfer,” the letter said.

You sure EW couldn’t have done just as well with a case or REALLY GOOD BEER and an impromptu scrum, or scrim, or whatever you hot rugby babes call it?