Friday, Feb 19, 2010
RBS residential property derivatives - just doesnt seem right...
Citywire: A bet on the property market's downfall
Spot-on piece from Linton Chiswick, raises a few questions about what a state-owned bank (RBS) should and shouldn't be up to. Why is this not being reported elsewhere?
Posted by smithers @ 11:52 AM (583 views) Add Comment
1 Comment
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1. 51ck-6-51x said...
Hmm, when one takes out a mortgage both sides are taking a leveraged position in property; and a less diversified one at that (until one has a very diversified portfolio). Furthermore leverage bets on property markets are already possible. I see this extension as a Good Thing. The "problem" I see is that many large institutions will no doubt end up taking very similar positions, adding to liquidity risk - but we'll never be rid of systemic risk in a free market.
Of course RBS being the lead is kind of concerning given their track record in this area ;p