Full impact of bond insurer downgrades not yet felt

The Financial Times notes that banks have yet to feel the full brunt of the impact from the recent downgrades of bond insurers. There likely will be more writedowns stemming from credit default swaps (CDSs) meant to be insurance--what cruel irony--against various collateralized debt obligations (CDOs). So far, the banks have taken $25.7 billion in writeoffs. That, however, reflects downgrades from a handful of relatively small bond insurers. The big boys--MBIA and Ambac--were downgraded more recently. Banks have not yet taken action on these downgrades, but they will soon enough. The only issue is, how much? Just one more reason for pessimism. As the Times notes, these writeoffs will come on top of writeoffs related to the CDOs themselves.  

For more:
- here's the Financial Times item

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