Thursday, January 10, 2008
Isn’t this what got us into this mess in the first place?
Goldman Sachs is endeavouring to convert the taxpayer loans to Northern Rock into bonds for sale to investors, the BBC has learned. But in order to make them sellable, these new Rock bonds would need a triple-A credit rating. Goldman believes one or more of the world's giant commercial reinsurers might take over some or all of the government guarantee. But they [the reinsurers] would charge for taking on the Rock risk from the government; for providing the cherished triple-A rating. Goldman's success or failure in securitising this debt will decide the very future of the Rock.