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that's a very interesting point.

Indeed , spanish banks could have prioritize mortgage structures in their balance sheet... but accordign to the sorces I read, everybody says that they do nto have them...in large amounts...The name behind it is "cedulas hipotecarias", and it has never been clear how the bank pays its clients the Euroibor interest rates (guaranteeed) from the mortgages

So , if there is a small amount of these kind of 5% default you lose everything  tranches I hope the bank takes it as a loss, pays the cedual hipotecaria and keeps on running.. because it has enough money...

My idea abut what the governmet was going to do is a) take most of the not structured mortgages (those which are in a general pool) and then take up until a certain risk in the structured so that the bank knows exactly the maximum loss.

I guess it will be known in cognress if this is the case, on the other hand, my doubt has always been how do you deal with private companies debt which are not structured...they have to make the structure on purpose and take the risk out of the bank. Basically, the government is going to do what the financer where doing plus takign the risk.. the government will structure the debt and the credit lines and buy it.. since it is not clear how it will be done, it is the nly part that I may not like.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Fri Oct 10th, 2008 at 05:49:47 AM EST
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