CM guaranteed the insurers?Just reading the last paragraph from the article I posted talking about the Hedge fund investor betting that MBI and ABK would go B/K.
It Stated:
"Separately, Fortune points out that two other victims of a potential bond insurer crash are Barclays and the Canadian Imperial Bank of Commerce. Both rushed to guarantee bond insurers in C.D.O.’s. If Mr. Ackman’s predictions of $5 billion to $6 billion in losses for those firms comes true, both Barclays and CIBC could face yet more subprime-related pain."
......Huh?!?!
We know the main issue with CIBC is that the $9.3B of hedged exposure is suepct because of the quality of the bond insurers and their ability to remain solvent.
But the article makes specific mention that Barclays and CIBC have made some guarantees to the bond insurers themselves? What would this be about?! Maybe the reporter doesn't know what he was writing? Then again the big companies with CDO exposure is MER, C, BSC, MS, etc.
Barclays and CM on notional value is much less than the other guys. It implies CM did some guarantees directly with the bond insurers (would like "re-insurance"). I do not think that is true, but in this day and age who knows? I will be looking for clarity on this issue.