Report: Banks Plan Ambac Rescue

A group of major banks are cooperating in an effort spearheaded by New York regulators to bail out troubled bond insurer Ambac Financial(ABK Quote - Cramer on ABK - Stock Picks), CNBC reported Friday.

The group, which includes Royal Bank of Scotland(RBS Quote - Cramer on RBS - Stock Picks), Wachovia(WB Quote - Cramer on WB - Stock Picks), Barclays(BCS Quote - Cramer on BCS - Stock Picks), UBS(UBS Quote - Cramer on UBS - Stock Picks), Societe Generale, BNP Paribas, Dresdner and Citigroup(C Quote - Cramer on C - Stock Picks), is trying to work with New York State Insurance Commissioner Eric Dinallo, who already is at wok fashioning a bailout plan, the business network said.

Ambac and rival MBIA(MBI Quote - Cramer on MBI - Stock Picks) have been under fire as the major ratings agencies have assaulted their triple-A ratings -- critical to their business of insuring municipal and corporate debt. The firms' increased foray into insuring exotic mortgage-related securities, which have plummeted in value during the credit crisis, has caused many to question whether they can pay issuers of that debt should it default.