Yet regulators and lawsuit-fearful auditors pressed banks and other financial firms to relentlessly knock down the book value of this subprime paper, even in cases where these obligations were being serviced in the payment ofprincipal and interest.
Inevitably, there will be strenuous efforts made by the Bush Administration, other Western governments and numerous private banks to stampede the former Soviet Union into a commitment to secure all debt obligations beyond the very limited rescheduling ofprincipal payments already agreed for 1992.
There are two more twists to principal-protected notes that investors need to understand: First, they're unsecured obligationsofthe banks that issue them.
Uncle Sam's obligations in the 1970s were little better than today's junk bonds when you consider how the real worth oftheprincipalof those bonds melted away like ice on a hot summer's day.