donzelion

Lloyd's Dampens Investor Confidence

"...time spent on due diligence on the deal was "three-to-five" times shorter than usual..."

All of the banks knew that the liabilities in the targets they were acquiring were unknowable. If the private sector could create these unknowable liabilities over the course of a decade or more, how could they - or anyone else - unravel that kind of complexity in a matter of weeks?

By buying up both healthy assets and plague victims, the banks wanted to position themselves to seek a political remedy to a problem far beyond their power. So far, it's working out well for them: the government can't work through the complexities underlying all the liabilities on the books, but it can print money - the "gordian knot" solution to a long-standing problem in the private sector.