The Bank-Insurance-Municipal Daisy Chain
Why the Federal Government Will Bail Out the States


By David Goldman
Asia Times - Inner Workings
July 7, 2010


Bank preferred debt, I argued on March 1, 2009, would not be allowed to go under after the fashion of Fannie and Freddie preferred, because shutting off payment on bank preferreds would ruin the insurance industry. Credit protection on the insurers was trading at over 1,000 basis points above LIBOR that week, which marked the nadir for the banks. As I wrote then,

…the global insurance industry took down 40% or more of the commercial bank “hybridâ€