Warren To Da Wescue!
Does it look like I’m bluffing, bitch?
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While catching my recommended daily allowance of CNBC this morning, Becky Quick (aka. “Summer Teeth”) spoke with Warren Buffett about his offer to rescue bond insurers by providing re-insurance on up to $800 billion in municipal bonds. Via Berkshire Hathaway, the offer was extended to New York Superintendent of Insurance, Eric Dinallo, for his blessing. Subsequently, the offer was made last week to Ambac Financial (NYSE:ABK), MBIA (NYSE:MBI) and Financial Guaranty Insurance Co (FGIC). The plan would ensure that the bond insurer would be backed by Berkshire Hathaway in the event that the municipality and insurer both fail.
Buffett addressed the pricing disparity of these “14% bonds” versus Triple A-rated Treasuries below 4%, and added that the muni bond market appears as if it has “lost their Triple A…they’re trading as if they’re uninsured now.” The Buffett Bailout would certainly free up some capital for these bond insurers to deal with their CDO woes.
Apparently one of these firms has already rejected the plan. So, they’re probably gonna tank. Hey, Warren…I hear Latrell Sprewell is broke. Hook a brotha up!
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