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There were rules that were supposed to prevent such overleveraging that they skirted by hiding their interest in the bank. The holding companies were so transpa
by Beltiras 11y ago
There were rules that were supposed to prevent such overleveraging that they skirted by hiding their interest in the bank. The holding companies were so transparent about it that they had silly names like Drawercorp and (I shit you not) Twisty (The Icelandic name is Vafningur, it kinda translates)
- JumpCrisscross 11y ago> There were rules that were supposed to prevent such overleveraging that they skirted by hiding their interest in the bank. To clarify, executives at Bank created a Holding Company. Bank lent Holding Company $100. Bank then sold Holding Company Bank stock for $100, thereby manufacturing $100 in "equity". This "equity" makes Bank's debt/equity, and other equity-based leverage ratios, look rosier than they are. I recall a similar shit show going down around Karzai's cronies in Afghanistan.