Buffett's Not Insurers' Only Hope

Warren Buffett is offering monoline bond insurers just enough of a financial lifeline to hang themselves, but a handful of alternatives to his so-called bailout may provide financial guarantors and the broader market more attractive options.

Buffett's plan proposes to reinsure some $800 billion of municipal bonds backed by Financial Guaranty Insurance Co., Ambac Financial(ABK Quote) and MBIA(MBI Quote), three of the more cash-strapped insurance entities.

The proposal will have the effect of siphoning away valuable municipal bond revenue from the companies, while offering comparatively little relief in the form of fresh cash to stave off future losses in some of the riskier, more esoteric debt that has bedeviled them. ...