While still on Page 1, the Council introduces an impressive amount of bureaucratic noise about exceptions to the rule needed to account for legitimate market making, hedging, and underwriting transactions.
Mind you, the bank we hired to underwrite this transaction is privately telling its other clients something entirely different.
Among the requirements for participation in "Untitled" were that the artist's potential collaborator be heterosexual, unmarried and, of course, willing to underwrite the transaction.
There were signs yesterday that the moves had an immediate effect on the credit markets, as banks became more willing to lend to each other now that there is a federal guarantee underwriting many transactions.
This method of risk avoidance (i.e. Title Agents clearing title before a policy is issued) coupled with risk assumption (i.e. Title Insurers underwriting these transactions) would be akin to your Homeowners Insurance Company making a monthly visit to your house to ensure that all of your electrical wiring was up to code and that your burglar alarm was working properly.
Two British banks, the Hong Kong and Shanghai Banking Corporation and the Standard Chartered Bank, along with other foreign banks, maintain Shanghai branch offices that underwrite foreign trade transactions and exchange foreign currency in connection with trading operations.
A former head of DfID Ethiopia said to me, in relation to the relocation of the Omo peoples, "but if they're being relocated anyway, aren't we making their lives better?" She could not see that there was a problem with underwriting the transaction.
As the study noted on its first page, "These permitted activities — in particular, market making, hedging, underwriting and other transactions on behalf of customers — often evidence outwardly similar characteristics to proprietary trading".
An alternative financing method could be finding a Small Business Administration lender that would be willing to underwrite a significant portion of the transaction.
