Warren Buffet to the Rescue?
You have got to hand it to Warren Buffett. He does have a sense of humor. This week Buffett offered to take the tax-exempt insurance business from the various monoline firms (Ambac (ABK), MBIA (MBI), FGIC) at a low ball price, and leave them with all the toxic waste from the various structured vehicles they insured. This would mean the investment banks who are counting on that insurance to hold down their losses from the subprime garbage they have on their books would see any hopes of getting anything from the monoline firms reduced to zero. Why would the investment banks let that happen? Surely they should step in and recapitalize the firms, which while expensive, would be less than the losses they would be forced to immediately take should the monolines fail. Why let Warren get what is a very profitable business which could eventually allow the banks to get their money back? A lot of people and I were scratching our heads, wondering “What was Warren thinking?” He is very savvy and sh
