Tuesday, May 5, 2009

Bond Insurer Syncora Implodes, Triggers Credit Default Swaps

Syncora insured over $140 billion in bonds. Its default is expected to trigger $18 billion in credit default swaps. Netting of swaps means the total exchanged will be roughly $1 billion. FT reported:

The Syncora saga highlights how complex and intertwined different parts of the credit and derivatives markets have become. Investors are seeking to find out whether the recent break-up of MBIA, the biggest bond insurer, triggers payments on credit derivatives on MBIA.

H. Rodgin Cohen's prediction becomes more very concerning.

“The system will look more like what preceded the current environment than many people seem to believe.”
Wall Street will look and act the same thanks to trillions in taxpayer money. I find that very easy to believe given the money changers in our hallowed halls of government.