The following notes presumed to have been scribbled by Carlos Molotov Pavlov were recently found on a napkin:
“If a bank is allowed a limitless leverage as long as he lends to a sovereign rated AAA then that sovereign should be fairly predisposed to see our suggestions in a favorable light so let us start with that.”
“Then how much leverage could we suggest that a bank that lends to a corporation rated AAA or AA- could be authorized to have before the regulators choke? 70? too much? Ok let us suggest 62.5 to 1... that should do it”
“If a bank is allowed a limitless leverage as long as he lends to a sovereign rated AAA then that sovereign should be fairly predisposed to see our suggestions in a favorable light so let us start with that.”
“Then how much leverage could we suggest that a bank that lends to a corporation rated AAA or AA- could be authorized to have before the regulators choke? 70? too much? Ok let us suggest 62.5 to 1... that should do it”
