Bond Insurers, Ambac, FGIC and MBIA are negotiating with financial firms to more or less rip up the insurance the monolines sold to them to cover potential losses on their CDS contracts. 

After the downgrade of their triple-A credit ratings by both Moody’s and Standard & Poors last week, the banks most exposed to the bond insurers will take further hits to their bottom lines after thinking the worst was behind them.