Losses and lawsuits
Two monolines face lawsuits for not paying out on guarantees made on collateralised debt obligation of asset-backed security tranches. How will these legal actions affect the monoline sector? Radi Khasawneh reports
Battered by downgrades and escalating writedowns, and forced into emergency capital raising, the last thing monoline insurance companies need is further bad press. Yet two separate lawsuits, filed in New York in March, could further damage their reputations and cause the market to question the validity and enforceability of monoline guarantees.
The suits involve New York-based Financial Guaranty Insurance Company (FGIC) and XL Capital Assurance (XLCA), the financial guarantee subsidiary of
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