NEW YORK (Reuters) - New York Gov. Eliot Spitzer on Thursday said he and the state insurance superintendent were making "good progress" on a plan to stabilize bond insurers, adding he was being careful not to get ahead of the federal government.
By Joan Gralla
NEW YORK (Reuters) - New York Gov. Eliot Spitzer on Thursday said he and the state insurance superintendent were making "good progress" on a plan to stabilize bond insurers, adding he was being careful not to get ahead of the federal government.
Several bond insurers are struggling to raise capital because rating agencies have told them that otherwise their money-losing subprime plays could cost them the top "AAA" ratings their business requires.
Whether New York's former attorney general, known for aggressively prosecuting Wall Street misdeeds, can now persuade banks and brokerages to agree on a rescue plan has been questioned by financial analysts, who also say the clout of federal agencies likely will be needed.
!ADVERTISEMENT!Asked what New York could do by itself, the Democratic governor told reporters: "We are having conversations with experts ... (We are) making sure we are not going out ahead of where the Fed and Treasury would want us to be."
Spitzer said he and Insurance Superintendent Eric Dinallo were spending "multiple hours" on their rescue plan, adding the companies' problems did not threaten the U.S. municipal bond market's stability.
Municipal bonds have one of the lowest default rates in the world of less than 1 percent, but many issuers bought insurance because it makes it easier for them to market their bonds.
States, counties, cities and towns have sold about $2.5 trillion of debt to pay for new schools and roads, for example.
Spitzer did not disclose any details of his plan only saying he was crafting a "smart way to recapitalize the bond insurers."
(Reporting by Joan Gralla; Editing by James Dalgleish)
