They involve interest rates, for example, or compound returns.
The other scenario would involve interest rates having to go up, because investors would start to lose confidence in Britain's abiliity to pay its debts.
The frauds being prosecuted now involved interest rate manipulations of only a few hundredths of a percentage point.
This was a trade between Barclays and Credit Suisse involving interest rate swaps that enabled Barclays to transfer the gain to Credit Suisse without triggering tax.
When Diamond was forced to resign in July 2012 over a scandal involving interest rate rigging by his traders, his successor, Antony Jenkins, also promised to focus on changing the culture.
Following a review, the bank said total provisions for the scandal involving interest rate swaps were now £850m, and £2.6bn for the PPI schemes.
Finally, a cost problem with Pay for Success is that, as critics contend, with private sector lenders involved, interest rates will tend to be higher than with public sector bond issuance.
Jonathan J. Miller, the president of the appraisal firm Miller Samuel and a market analyst for Prudential Douglas Elliman, said that even though affordability was at an all-time high, the usual equation involving interest rates, housing prices and personal income was almost irrelevant, if shoppers were unable to get mortgages to buy properties now tantalizingly within reach.
Frey, too, points out that the vast majority of servicing agreements allow only very small numbers of modifications, generally involving interest-rate reductions rather than principal write-downs.
A deal involving interest-rate swaps that Goldman struck with Oakland, California, more than a decade ago has ended up costing the city about $4 million a year, but Goldman has refused to allow Oakland out of the contract unless it ponies up a $16 million termination fee--prompting the city council to pass a resolution to boycott Goldman.
