MOODY'S PROMISED BUT S&P DIDN'T

(Via Atrios)

Below I noted a comment by a Moody's executive that offered some solace to those worried that the insurers of sub-prime crap would not have their credit ratings downgraded. S&P doesn't seem to be on board with this and ACA Financial Guaranty Corporation may be in BIG trouble. If it gets downgraded, it will go broke because it doesn't have enough cash to cover what is in essense a margin call. This means that insitutions that hold this crap will have to re-value it, perhaps something like the Swiss re-insurer did - TO ZERO.

Details at MaxedOutMama and Calculated Risk.