And we offered to take over the liabilities for the whole $800 billion of these three companies for a premium that would be equal to, essentially, one-and-a-half times the remaining premium left over the life of the bonds. They have what they call an 'unearned premium reserve' which reflects the original premium less the amount that's been proportionately earned. And we said, for one-and-a-half times that amount, we would take away all of their liabilities so that the $800 billion in bonds would carry a real triple-A insurance, and would sell in the market as if it had real triple-A insurance. Whereas now the bonds sell at significant discounts.
And we provided additionally that if they felt that this premium was too high or that they could do better that for thirty days, they would have the backstop of our offer which would be totally firm, and if they came up with anything better for themselves and for the holders of their insured bonds, that for a break-up fee of one-and-a-half percent of the premium, that they could go and take the other deal.
Well, they would still have substantial book capital. But how deep that problem is with the CDOs is and other things they've done, we can't figure it out. What this does, is it means that the municipals, in effect, get taken off the table and they know they're good and you've got 800 billion of those that are good. It doesn't do anything for the CDOs, but I'm not sure anything is going to do much for the CDOs. We'll just have to find out how that plays out.
So, our system puts the municapals at the front of the line.
Unterstützung im Municipal Bond hat er dafür sicher. Und eine ganz gute Prämie kassiert er auch ein. Das 1,5 fache auf die anteilig noch nicht vereinnahmte Prämie, heißt auf gut deutsch 50% Risikoaufschlag. Eigentlich unverschämt, wenn er damit durchkommt.
Eine Win-Win-Lose Situation
Buffet Wins
Muni-Holder Wins
Monoliner Lose
Nicht umsonst sind die Monoliner heute im Minus