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The twist was that banks could pledge mortgage-backed securities as collateral — including securities that could not be traded and had no market price.
Banks could pledge mortgages or other outstanding loan obligations, expanding the potential pool of collateral by about €200 billion, according to E.C.B. estimates.
On Aug. 17, 10 days after the Fed refused to lower its key rate, it held an unscheduled meeting and announced that it would cut the rate at which banks could take out short-term loans from its "discount window," a program normally used by banks in trouble, and said banks would be able to pledge mortgages as collateral.
An alternative explanation for the negative impact of Tangibility on the probability of filing for bankruptcy by a Spanish micro firm is that firms with high levels of tangible fixed assets relative to their levels of financial debt still have assets they may pledge as mortgage collateral to get new loans or refinance their current ones.
First, there is a positive and strong correlation between the ex-ante probability of default and the ratio of tangible fixed assets (the assets that can be pledged as mortgage collateral) to financial debt in the case of Spanish micro firms, suggesting that firms with risky business models bias their capital structure towards mortgage loans to avoid filing for bankruptcy in the event of default.
What historically empowered America's original capitalists was conventional savings-based finance and the pledging or mortgaging of assets, with access to further ownership of new productive capital available only to those who were already well capitalized.
Norwich Union has already slapped a time bar on complaints but says it has no plans to alter its mortgage pledge.
WASHINGTON (AP) — The Obama administration, scrambling to get its main housing initiative on track, extracted a pledge from 25 mortgage company executives on Tuesday to improve their efforts to assist borrowers in danger of foreclosure.
In early March the spread between yields on Fannie Mae debt and Treasury bonds was higher than at any time since 1986.This helps explain why the new Fed facility allows primary dealers to pledge AAA-rated mortgage securities as collateral for borrowings.
With foreclosures surging, the last thing the nation needs is another government-hosted meeting where mortgage lenders pledge once again to do their utmost to help distressed borrowers stay in their homes — and then go back to the business of foreclosure.
On the one hand, we want to construct different credit risk assessment model according to different supply chain financing mode, including inventory mortgage, receivables pledge and purchase-order financing.
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