by Calculated Risk on 11/05/2008 04:51:00 PM

Ambac and MBIA are back in the news ...

From Bloomberg: MBIA, Ambac Losses Widen on Higher Claims Forecast

MBIA Inc. and Ambac Financial Group Inc., the bond insurers crippled by credit-rating downgrades, posted wider losses than analysts anticipated ...

MBIA ... reported a $806.5 million net loss after setting $961 million aside for guarantees on home-equity loan bonds. Ambac fell 41 percent as it recorded a $2.43 billion net loss after reserving $3.1 billion.

"The big issue for bond insurers is their ratings," said Jim Ryan, an analyst with Morningstar Inc. in Chicago. "If the rating agencies pile on, that could create more problems."

And right on cue from MarketWatch: Moody's cuts Ambac to 'Baa1'; outlook developing

Paul Jackson at HousingWire adds: Ambac Posts $2.4 Billion Q3 Loss on “False” MBS Recovery

In an investor presentation, Ambac said that second quarter RMBS trending among private-party transactions it had insured — which had initially turned upward earlier this year — has since proven to be the latest example of a “false positive” in battered mortgage securities markets.
...
Ambac expressed hope that the Treasury’s TARP program and capital purchase program would “establish a floor for housing market fundamentals,” according to its investor presentation. The insurer has asked Treasury to consider guaranteeing a portion of its structured securities portfolio, as well.

I think it is absurd to hope that the TARP will "establish a floor for housing market fundamentals". Hope is not a plan.

Note: just to be clear "Hope is not a plan" is a phrase I've used for at least 30 years ... and was not intended as a swipe at President-elect Obama.