In 2005 that obligation was itself securitized

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Unformatted text preview: oan under then existing rules. c N. M. Kiefer Economics 4230: Banks 37/ 40 Greece & Creative Accounting Greece took things a step further: With Goldman, Greece entered a currency swap that was highly profitable in the early years (2001) but carried an obligation to buy back the swap in the future. In 2005 that obligation was itself securitized, putting off the actual payment. Again, not recorded as a loan. Now, Greece has issured securities obligating proceeds from aircraft landing fees and the proceeds from the national lottery. These are recorded as sales, not loans. c N. M. Kiefer Economics 4230: Banks 38/ 40 Greece & Creative Accounting FT reported a truly creative deal: Forming an SPV named Atlas, in 2001 and raising e2B backed by grants the finance ministry expected to receive from European Union structural funds. The SPV was arranged by BNP Paribas and Deutsche Bank, along with two Greek banks, EFG Eurobank and National Bank of Greece. FT comments ”Such structured finance deals implemented through SPVs because they were technically recorded as sales through SPVs rather than collateralized loans to the government, misled investors and regulators about the actual depth of a country’s liabilities, thus allowing it to sell more sovereign bonds.” c N. M. Kiefer Economics 4230: Banks 39/ 40 Current Status NYT: As recently as 2008, Eurostat, the European Union’s statistics agency, reported that “in a number of instances, the observed securitization operations seem to have been purportedly designed to achieve a given accounting result, irrespective of the economic merit of the operation.” Again: Transactions with no business purpose are suspicious. This stuff is just too tempting, and sovereigns are not watched carefully ... c N. M. Kiefer Economics 4230: Banks 40/ 40...
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This note was uploaded on 01/27/2014 for the course ECONOMICS 103 taught by Professor Angie during the Spring '12 term at Columbia College.

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