Bear, Stearns, First Franklin: Lawsuits?

Oh, yah, it can get worse.

...David Wallis, Ambac's chief risk officer noted that their 'losses are heavily concentrated in a small number of deals which they characterized as “striking” and essentially suspicious' (reader Brian's description). The also made some comments on their Alt-A deals - AMBAC has half a dozen deals now projecting cumulative losses of 20-25% vs initial expectations of approximately 6%.

According to Brian, AMBAC hinted that they might pursue legal action against Bear Stearns and First Franklin.

Actually, that's the good news. From reports at Calculated Risk over the last several weeks, it is becoming apparent that the "mortgage crisis" may be much smaller than first indicated--that is, it may be restricted to certain small geographic areas, and (within those areas) concentrated on only the deals which are fraudulent.

Much as Congress won't like this, it may be better to wait for the smoke to clear than to pass unhelpful "rescue" bills.