Quote:
Originally Posted by David Waring
Hi Jeevmania,
This is I think the key that you are looking for is that the banks were the lender of last resort for the off balance sheet entities so when those entities got into trouble the banks got into trouble just like they would have if they had arranged similar terms with an entity that was simply a client and not an off balance sheet entity that they themselves had set up.
I don't know all the specifics but there is probably a good chance that the regulators didn't fully understand this relationship and the additional factor that was in play here because these entities were set up by banks.
Let me know if that is not what you are looking for.
Best Regards,
Dave
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I am still a little confused about these entities. When Sharron Watkins was testifying I remember she said these were offshore because offshore taxhavens allows for these off balance sheet, over the counter type derivatives to be hidden on the asset side of their balance sheet. Ie. it would defeat the purpose of creating these SIVs in the US because a finacial audit would show right away that they are hiding their debt on the asset side. It's only because of offshore bank secrecy that this works... Am I getting this right, or not even close?
Regards,
Madashell Dude