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Weak banks in peripheral countries remain vulnerable to a downward spiral in which their holdings of government bonds are downgraded and fall in value, forcing them to come up with ever more collateral to keep borrowing from the central bank.
Mr. Martin, 41, the president of Diamond Services, need only consult with his father, Kenneth (Buster) Martin, who once placed his last $25,000 on his banker's desk as collateral to keep the company running.
The European bank also upped the value of assets that the banks must provide as collateral to keep receiving aid, putting the banks in an even more precarious position.
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It also means Pakistan feels bound to keep collateral damage to a minimum.
The bank accepts parmesan as collateral for loans, helping it to keep financing cheese makers in northern Italy even during the worst recession since World War II.
The financially troubled Amtrak has received permission to put up parts of New York's Pennsylvania Station as collateral for a $300 million loan to keep the national passenger railway running through September, its president said yesterday.
Even if Goldman got to keep the collateral, an AIG failure posed significant economic risk, since its hedges [credit default swaps on AIG] were relatively small, and the prices of the CDOs were plummeting.
In Europe, banks and regulators focus on risk-weighted capital as opposed to pure capital, allowing those banks to keep significantly less collateral on hand for assets that are deemed not very risky, like ultra-safe Treasury bonds.
The man decided to keep Liam as collateral until Frank came up with the money.
Those banks also were allowed to keep $35 billion in collateral AIG had given them in the weeks leading up to the final payment.
"Tearing up the contracts at the height of the panic and allowing banks to keep both the collateral and the CDOs would have had the perverse result of banks ending up with more than 100 cents on the dollar and increasing costs to the taxpayer," said a senior Obama administration official.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com