Friday, January 18, 2008

Just A Little More Time...

This really is getting absurd.

NEW YORK (Reuters) - Struggling bond insurer ACA Financial Guaranty Corp is set to ask trading partners for more time to unwind its insurance contracts, The Wall Street Journal reported on Friday.

Standard & Poor's in December cut ACA Financial Guaranty's credit rating to junk.


Friday's report, quoting people familiar with the matter, said ACA is likely to announce an extension to give it more time to work out arrangements.

One possible solution would be a rescue plan giving the counterparties stakes in a restructured bond-insurance company, while another was a capital infusion, it said.

Essentially this would mean that those who bought insurance would fork over money to the insurance company to maintain the fiction that they're actually insured.

It's akin to bailing water from the port side of the boat to the starboard side in an attempt to prevent it from sinking.