Comment by: Anonymous. Posted 13 years ago [2011-03-25 15:37:07]

No, the word "insolvent" in the financial world - not just for bond insurance - is appropriate for both cases: (1) a firm that cannot pay maturing obligations as they come due and (2) a firm in which liabilities exceed assets. Note that it is entirely possible that a firm that is "insolvent" for one of the two reasons may NOT satisfy the other condition (ie, a firm with liabilities greater than assets may be able to pay current maturities).

Comment by: Anonymous. Posted 13 years ago [2011-03-25 08:47:12]

My understanding of insolvency is not that liabilites exceed assets on a mark to market basis, it is that you can't pay you bills as they become due. Therefore the term "deeply insolvent" is just gratuitous and wrong. If MBIA was insolvent, then its regulator would and should take the action of shutting it down as they did for all other monolines on the basis that making further payments almost certainly detracts from recoveries by other creditors and they didn't and it is still going and obviously in the opinion of the regulator they haven't reached than point yet 2.5 years on

Comment by: Anonymous. Posted 13 years ago [2011-03-24 01:07:58]

I trust Blackrock's results in this case. Blackrock is good in this space - when it wants to be. I don't believe they'll ever live down their role in falsely validating the terms of the Fed's Maiden Lane lending in the Bear Stearns rescue.

Comment by: Anonymous. Posted 13 years ago [2011-03-24 01:01:00]

Disagree with the comment below. It is quite possible that MBIA Insurance was insolvent (correctly valued liabilities worth more than assets) two years ago even though such claims have not been realized yet.

Comment by: Anonymous. Posted 13 years ago [2011-03-24 00:56:14]

Disagree with the comment below. It is quite possible that MBIA Insurance was insolvent (correctly valued liabilities worth more than assets) two years ago even though such claims have not been realized yet.

Comment by: Anonymous. Posted 13 years ago [2011-03-23 21:57:36]

It sounds like all these banks have just gone out and bought CDS protection on MBIA Insurance and are now using BlackRock to try to push it into bankruptcy so they can both make money and gain sympathy that somehow they were "wronged'. I know it is hindsight but "insolvency' is like a diagnosis of terminal illness in the corporate world. Clearly because MBIA Insurance is still around today, it may have been very sick but it couldn't have been "deeply insolvent" two years ago.