Friday, September 26, 2008 3 comments ++[ CLICK TO COMMENT ]++

Michael Callen (Ambac CEO) Interview

Bloomberg has an interview with the CEO of Ambac, Michael Callen. As usual with these Bloomberg links, click on the link on the top-right (for some reason I can't link directly to the URL--it gets cut off in my post.)

Just to quickly recap, he clearly isn't happy with the rating agencies. Ambac will be facing a tough situation if it gets downgraded. The insurance regulators, unlike many other regulators, are quite knowledgeable and are friendly to the bond insurers. They will let Ambac Assurance transfer some money to the investment business but I just don't want to be bugging them too much. Whenever Ambac runs up to the regulator, it sort of burns some good faith.

Callen seems to pin a lot of hope on the government bailout; whereas I think it will only tangentially help the bond insurers. The problem, on top of the moral issues I have ranted about, is the fact that price discovery is still going to be elusive. Everyone seems to think that we will get liquidity and prices will get closer to true intrinsic value but I just don't see it. I still think it will all come down to actual defaults/losses on the mortgages. No one talks about it but the only good thing right now is that the US economy is actually doing ok. The commodity price declines--it can drop even more--should provide a small boost.

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3 Response to Michael Callen (Ambac CEO) Interview

September 27, 2008 at 6:04 AM

Good video. I was able to grab a direct link. Are you long ABK?

September 27, 2008 at 6:23 PM

I have been long for a long time... which kind of means that I have no chance of breaking even on my investment :( Unless I average down that is...

September 29, 2008 at 6:07 AM

Moody's Investors Service placed the Aaa insurance ratings of MBIA and Ambac Financial under review for a downgrade for the second time this year after the two largest bond insurers reported wider losses from the mortgage-market slump.
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