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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.
Like a finely balanced gyroscope that has to keep spinning to stay upright, Granite needs a steady supply of mortgages fed into its pool of collateral to replace ones that are redeemed early.
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It was American investors who chased higher returns without any careful examination of the underlying pools of collateral, providing more money for these overzealous banks to lend.
The bank then issues bonds entitling investors to different levels of coupon and principal in the structure, differentiating the amount of collateral in the pool that backs them.
It means the pool of assets available to provide collateral for Northern Rock's creditors, including the Bank of England, is dramatically reduced, calling into question government claims that taxpayers' money is safe.
Late in the day on Sunday, Mr. Fuld learned that the Fed would expand its lending by allowing banks to post a wider variety of collateral, and that the banking industry had cobbled together a $70 billion lending pool.
They use the excuse of collateral damage".
Lack of collateral was invariably the reason.
"There's a lot of collateral damage".
"The amount of collateral damage is huge.
Fourth, inspections are a valuable source of collateral intelligence.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com