Bailout of Bond Insurer

[TJ_98370]

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Officials from Merrill Lynch, Bear Stearns and other major banks are in talks to bail out a struggling bond insurance company that has guaranteed $26 billion in mortgage securities, according to two people briefed on the situation, because the insurer's woes could force the banks to take on billions in losses they had insured against......

....The troubles at ACA could also serve as the first real test for credit default swaps, the tradable insurance contracts used by investors to protect, or hedge, against default on bonds. In June, the value of bonds underlying credit default swaps rose to $42.6 trillion, up from just $6.4 trillion at the end of 2004, according to the Bank for International Settlements.....
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[rose-colored-coolaid]

Of course there is contagion. Everyone knows that money is generally covered in germs. And who handles more money than banks? Walmart, Starbucks, McDonalds maybe: but after that it's banks. So of course there is contagion in the banking system. Yeish, we learned this in like 3rd grade.

[TJ_98370]

Your right RCC. My mom always told me to wash my hands after handling money.

[TJ_98370]