Something tells Moishe, that this is a scheme to separate the shit business (CDOs and the like) from the good business (muni's) in order to allow for a bailout or bankruptcy of the shit business. just Moishe's sense.
Privately held bond insurer Financial Guaranty Insurance Co. (FGIC) asked the NYS Insurance department to allow them to cleave them in twain.
FGIC is closely held, owned 42% by mortgage-insurer PMI Group, with Blackstone and Cypress each having another 23%. (GE was one of the co-founders of FGIC, but sold their stake to PMI for $2.16 billion in 2003)
Here's a great irony: The idea of doing this was first floated several months ago by my sister (no shit), who is married to a very senior FGIC exec. He's a sharp attorney, but she's even cleverer.
NYS insurance commissioner Eric Dinallo said on CNBC earlier, "As of this morning, we received a notification from FGIC that they received an application to have their business split in two. They sent that to the head of property and casualty, Larry Levine, this morning."
The WSJ noted the following:
"Financial Guaranty Insurance Co., a major bond insurer, has notified the New York State Insurance Department that it will request to be split into two companies.
One of the firms would likely retain much of the business of insuring structured finance bonds such as those backed by mortgages, which have come under severe pressure due to the housing market slowdown, according to a person familiar with the matter.
The other company would likely retain most of the municipal bond insurance business, which is stronger, the person said. Details of the precise structure are still unclear, but the plan could involve raising additional capital."
Now the question is, will Ambac (ABK) and MBIA follow . . . ?