Audio – Treasury’s Steel says progress being made with bond insurers

February 21, 2008

robert-steel2.jpgTreasury Undersecretary Robert Steel told the Reuters Housing Summit that “progress is being made” as U.S. bond insurers seek recapitalization or other strategies to maintain their top “AAA” ratings.

New York state officials have been working with banks on rescue plans for several big bond insurers, which guarantee some $2.4 trillion of debt. The companies are facing big losses from insuring bonds linked to subprime mortgages and other risky assets.

So far, FGIC Corp. has said it wants to split into two companies, Ambac Financial Group is reportedly in discussions to raise some $2 billion of capital, and MBIA Inc. says it is looking at shifting its insurance operations into multiple subsidiaries under the current holding company.

Insurance companies are regulated by the states, not the federal government.

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