Ambac: Hold The Books, and Cook Em

Ambac, reported its biggest net income +$823 million, since going public in 1991,

benefiting from an accounting change that allowed it to log a $5.2 billion gain as its main business of insuring municipal and corporate securities fell.

Oh yes, under creative book keeping regs put in force at the behest of Wall Streets masters of chicanery...

companies are allowed to book gains when the market value of their own obligations declines.

The #2 bond insurer that was stripped of its AAA rating, posted EPS of $2.80 a share...with the accounting adjustment,

The Nattering One muses.... Hmmm lets poke at this carcass.

Net premiums -7%; credit enhancement production, a measure of new business, -95%. Expected claims on CDO, which would reduce profit, +$1.1 billion.

Q4 loss -$3.3 billion; Q1 loss -$1.7 billion; Ambac's Q2 $823 billion gain was boosted by a $961 billion market value gain on their CDO holdings...

Deducting this bogus gain, leaves Ambac's Q2 loss at $1.53 a share, or -$450 million.

Worse yet, according to CDO spreads, the $961 billion benefit on June 30th, would have been -$1.3 billion as of July 31st.

Which means as of last week, Ambac's Q2 "gain" of $823 million was actually a loss of $790 million and growing.

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