- Existing-Home Sales Jump to 2-1/2 Year High
- Wave of Debt Payments Facing US Government
- US Job Losses to Bottom out Next Quarter: NABE
- Obama Jobs Forum May Be More Political Than Practical
- Maria Blog: Are Crazy Retail Deals Good for Business?
- Suze Orman’s 'A Healthier, Wealthier You'
- Latest Holiday Drinks: The Madoff...and the TARPatini
- Madoff Trustee, Law Firm Submit $22.1 Million Bill
- JPMorgan's Dimon Could Succeed Geithner: Report
- Expect a 'Square Root-Shaped' Recovery: Chief Investor
- Madoff—The Holiday Drink
- HP to Feed on Enterprise Spending Next Year: Tech Analyst
- Busch: Markets Smell a Country Rat
- Schork Oil Outlook: Mission Impossible For The Bears?
- S&P Stocks Trading at New 52-Week Highs
- Losey: Asset Allocation At Retirement
- Farrell: Obama Hectored, Ignored and Restricted?
- Don't Dwell on Investment Mistakes; Move on, Like Buffett
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Existing-Home Sales Jump To Highest Level in 2-1/2 Years
- Wave of Debt Payments Facing US Government
- Start-Up Proves Everything Really Is Better With Bacon
- TV Retailer QVC Joins `Black Friday' Frenzy
- S&P Stocks Trading at New 52-Week Highs
- China Asks Its Banks to Slow Down
- Paul: Audit the Fed
Text Size 
News that the bailout of troubled bond insurer Ambac Financial Group has hit a snag is sparking a flurry of activity among bankers to get a deal done quicky, according to people involved in the talks.
As first reported by CNBC, the bailout effort ran into trouble on Wednesday when the bond rating agencies said they wanted to see more capital injected into the bond insurer. A consortium of banks had already agreed to come up with $2.5 billion in capital.
 |
Like other bond insurers, Ambac is in danger of losing its critical triple A debt rating unless it raises enough capital to offset billions of dollars in losses from risky subprime related debt.
Early Friday afternoon, Moody's said that Ambac will likely lose its triple A rating if a bailout plan isn't worked out. Standard & Poor's made similiar comments earlier in the week.
The banks are now trying to come up with a different type of structure for the bailout that will satisfy the rating agencies.
People close to the proposed bailout remain confident a deal will still happen, possibily by sometime next week. Banks and the rating agencies are aware that if Ambac collapses, it would trigger another wave of panic in debt markets and send the stock market reeling.
The structure proposed by the consortium of banks was essentially dividing Ambac [ABK
Loading...
()
] into a "good bank/bad bank" model by splitting up the municipal bonds book, considered more attractive, from the collateralized debt obligations (CDOs) book.
The consortium will now come up with another structure, which keeps the two together, which could mean that they would need even less capital to keep their triple-A rating, sources close to the deal said.
If the new structure is approved by the rating agencies, a deal could be put into place by early next week, and talks are likely to occur over the weekend, the sources said.
Print
Email
- The show attracts a big TV audience every year, but this year it may take on even more importance.
- …you'll want to be prepared. Tips for getting the most out of the post-Thanksgiving shopping frenzy.
- Congressman Ron Paul explains to Squawk Box why he’s pushing legislation to audit the Federal Reserve.
- CNBC’s Phil LeBeau took a test drive of GM’s flagship electric car. Here’s what he thought of the Volt.
- A Macau casino will open Asia's first Michael Jackson shrine after its owners made a key purchase at a US auction.
- CNBC’s technology reporter Jim Goldman guides you through the best gadgets to buy this holiday season.
Data is a real-time snapshot *Data is delayed at least 15 minutes