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According to various reports, the New York State Insurance Department is meeting with various banks and dealer firms, trying to broker some kind of bailout for Ambac. One proposal being floated is for banks with exposure to insured structured finance deals to infuse the insurers with new capital. The theory goes that banks and brokerages would be forced to take new write downs in the event the insurers are downgraded, and therefore they might be better off putting up cash now to avoid the write down….
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