The prospect of banks who have so little capital bailing out Ambac is absurd.  For much of the past 7 months, we’ve been hearing a lot of criticism about the cozy relationship between the rating agencies, banks and monolines.  Now that we have the rating agencies threatening downgrades, suddenly it becomes acceptable for government regulators to encourage an even cozier relationship between the banks and the monolines.  Desperate times call for desperate measures.  What’s next?  I keep waiting for someone to suggest that the rating agencies should invest a few billion in the monolines.  There seems to be so little integrity left out there that I wonder what conflicts of interest are unacceptable.