Saturday, August 20, 2011

Structured Loans Sold By European Banks Are Its Version Of Sub-Prime Trap

link here to article

Municipal debt in Europe may be its version of the US sub-prime fiasco. Major banks have sold "structured products" to municipal borrowers that they are unable to pay back. The loans start out with low interest rates as a teaser to get the deal. After a fixed period of time, payments are based upon the value of the Swiss franc. The euro crisis has caused the value of the Swiss franc to rise dramatically against the euro. There are huge penalties associated with termination of the contracts.

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