4 ms·
True, but what sane bank would take on the risk (=higher interest) without knowing that it is worth it? So I assume there was some background deal, an assumptio
by mrich 15y ago
True, but what sane bank would take on the risk (=higher interest) without knowing that it is worth it? So I assume there was some background deal, an assumption that governments will cover for defaults.
- arijo 15y ago"Bankruptcy of Lehman Brothers" - http://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers http://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers
- bd_at_rivenhill 15y agoThe banks take this risk not just because they expect that there will be a bailout but also because the Basel Accords allow them to treat sovereign bonds as riskless when calculating their Capital Adequacy Ratio, making those bonds look like a better deal relative to other bonds of equal risk.