The Holy Grail is a clean break-up of the troubled monoline bond insurers. If done properly, it could heal severe municipal bond market dislocations. It could reduce systemic fear stalking financial markets as the monolines struggle to deal with the potential losses on toxic mortgage-related products. And it could return the monolines to what they should be: dull, slow growing insurers of safe municipal debt.

The trouble is how to split their capital fairly. Ambac, for example, has struggled as a single entity to raise new money to cement its triple-A rating. As it stands, at least one part of the business would probably be downgraded after a split. Regulators and politicians worry more about Main Street than Wall Street.