By now everyone has heard about Schneiderman's probe into the securitization of mortgage bonds. An ever-increasing number of banks are being investigated -- up to seven now. AGO and other bond insurers have been subpoenaed to present evidence as the process is investigated. The mortgage registry's records are being examined. Charges have not yet been filed but I find it interesting that not long after this process started, banks began suggesting they would settle for 20B each. Less than a month ago, they were "offering" to settle for 5B each. Co-incidence?
This could be very good news for bond insurers like AGO because they should be able to leverage the discovery process -- paid for by New York state -- in pursuing settlements with these banks. There's some risk though. If it turns out insurers were complicit, that would of course be terrible. The statements from Schneiderman's office said the insurers were NOT under investigation. Some investment analysts have stated that these insurers are under investigation. Interestingly, when I challenged the factual basis of one such statement that appeared in the Yahoo news feed, my comment was deleted the following day and was removed from my history. Things that make you go hmmm.