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July 16, 2008


Independent Accountant

Cox doesn't care what investors want. He wants to protect the interests of the banking industry.

A Mouse

"I think that the best way to approach a question like this is to ask yourself a simple question: did Mr. Tisch's company suffer a loss because it chose to invest in fixed-rate, as opposed to variable-rate, debt instruments? Yes it did."

Not if Mr. Tisch's company received a fixed annuity contract that matched the duration and maturity of the bonds they bought. Unlike banks, insurance companies are more match-funded with their asset and liabilities. Investors care about the credit spread between these assets and liabilities. Marking the assets down because interest rates move one direction, but leaving liabilities fixed isn't what this investor wants

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