Smaller monolines bargain over CDS but the bomb is ticking

Monoline bond insurers hit by the credit crunch, from MBIA and Ambac to the smaller and more troubled FGIC, XLCA and CIFG, are struggling to escape from billions of dollars of CDS contracts at vastly discounted prices. Their counterparties also want a deal — because the threat is that regulators will leave them with nothing at all.