Near the end of 2008, Libor rates plummeted, forcing the university to post collateral.
In order to borrow from the ECB, banks need to post collateral, but supplies of eligible assets are limited.
First, AIG used bailout cash it received from the government to post collateral that Goldman was allowed to keep.
Secondly, because they changed the contracts so that even if you do have an AAA you still need to post collateral.
Universities and not-for-profit hospitals around the country that had entered into interest rate swaps have been forced also to post collateral.
Banks can borrow for three years at a fixed 1% rate and is all they have to do is to post collateral.
Investors flocked to AAA-rated firms such as American International Group, which could take big risks without having to post collateral with counterparties.
With Cyprus and the other Eurozone wrecks looking for any path out of their morass, the gold market may well be reflecting an expectation not that the Euro states will liquidate their gold holdings, but that they will post them as collateral which can have a similar effect on the market.
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The CME Group hiked margin requirements four times in two weeks in silver, mandating that people who wanted to trade it needed to post a greater amount of collateral than before.
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Jean-Claude Trichet, the ECB's president, tried to damp down even that concern, pointing out that banks could tap unlimited liquidity at the ECB and that they had ample collateral left to post in return.
That expands the list of eligible collateral which banks can post from securitized debt (those asset-backed bonds accepted since Dec. 2007 on top of government gilts), just so long as the loans are residential or commercial real-estate mortgages, consumer loans (but not including credit cards), or corporate loans to non-bank borrowers.
That stops them from falling over, at least until they run out of acceptable collateral (and see this previous post).
So when they lost their AAA rating they had to post a hundred billion dollars and change of collateral in a few days: enough to darn near bankrupt anyone.
The use of these sophisticated weapons, precisely targeted by global positioning satellites, is designed to maximise their effects while limiting collateral damage, which would make the task of post-war reconstruction more difficult.
He added that there would be "serious collateral damage", with jobs hit - including 300 post closures in the next year.
He said that there would be "serious collateral damage", with jobs and services hit - including 300 post closures in the next year.
BBC: Cardiff council tax freeze plan amid ?22m of budget cuts
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