2008 0214 - GOV (House) - The State of the Bond Insurance Industry

  • (p1) - Chairman Paul Kanjorski (D-PA).
  • Chairman Paul Kanjorski (D-PA). Do these insurance institutions have the rate to participate with Federal Home Loan Banks?
  • Eric Dinallo. I am sorry. I did not hear the very last part.
  • Chairman Kanjorski. Why could the insurance companies not make an application to the Federal Home Loan Bank system for a line of credit?
  • Mr. Dinallo. I do not know the answer to that. Certainly, the investment banks that are the counterparties to their policies could make such an application, and you could do the re-insurance that way.
  • Chairman Kanjorski. We should look into that. I certainly would be amenable, and that is one way to spread the risk.
  • (p11) -  Chairman Paul Kanjorski (D-PA). It seems to me that we are flying down a road at a tremendous speed here that could bring into collapse the entire financial market as we know it today, not only in the United States but potentially it could move around the world and metastasize.
    • I am just disturbed that there are not too many people who are really speaking to the issue, and those who are speaking to the issue are assuming that somebody else is doing something about it.
    • Maybe I would like to know what the Governor of New York and what the superintendent of insurance of New York feel you can do surgically in the areas in which you have jurisdiction?
  • Governor SPITZER.  (NY) - Yes, sir. I agree with your final conclusion there.
    • I am torn between two objectives.
      • One, as I just said in my opening statement, is to generate a sense of concern such that we can move any potential deals with great rapidity,
      • and on the other hand, not to speak with such dire prognostication that the capital markets begin to sense there is no hope out there, because so much of this is emotional and driven by the analysis of what is likely to happen rather than what actually has happened, not to generate that cascading effect that we are concerned about.