April ended with two firms bailing on credit default coverage. MBIA, the huge bond insurer, sued Merrill Lynch. MBIA is asking the court to void certain credit default swaps it provided to Merrill through a special purpose vehicle.
Syncora Guarantee suspended credit coverage for 56 classes of residential mortgage backed securities. It didn't use the court system, but cited an order from the New York state insurance regulator.
The fight between security underwriters, rating agencies and bond holders continues. They worked hand in hand to inflate the bubble, now in tatters. The parties scramble to renege what they sold.
PEU Report/State of the Division