Will ACA survive the day? And what about that $61bn exposure if it doesn’t?

'Bond insurer ACA had its A-grade credit rating slashed to CCC in December. But it was granted a stay of execution until today. If it can’t raise $1.7bn, it will be insolvent and the first monoline to fall. Is it possible that that will be allowed to happen? Insolvency would mean ACA reneging on an estimated $61bn of contracts - much of which has been used by banks to hedge their CDO exposures. Which means Wall Street banks are today instantly looking at further massive writedowns. '