Report: Banks Plan Ambac Rescue

02/01/08 - 10:58 AM EST

TSC Staff

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.

This article was written by a staff member of TheStreet.com.
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