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To be "credible", a guarantee must be structured so as to burn a large enough share of the bank's creditor, so that the good assets in the overtaken bank eventually pay for the takeover.

If, instead, you guarantee the bank's debt down to junior subordinated debt...

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Fri Oct 3rd, 2008 at 03:46:53 AM EST
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