Syncora Guarantee stopped payment on bonds and asset backed securities it insured. MBIA, the huge bond insurer, effectively followed Syncora's lead by transferring $5 billion in assets to a new municipal bond insurance business. Large banks are suing. Reuters reported:
A group of major banks including Citigroup Inc, JPMorgan Chase & Co and Barclays Plc has sued MBIA Inc, charging that the bond insurer illegally restructured its operations by moving $5 billion of assets and leaving a key unit effectively insolvent.
Financial firms selling something they won't back? What a surprise! Syncora imploded. MBIA Insurance may be next. Is the same thing happening at Ambac?