The collateral for the loan is the company itself, together with its  BIS Review 115/2008  1  subsidiaries. 1 (Insurance policyholders and holders of AIG investment products are, however, fully protected.) Interest will accrue on the outstanding balance of the loan at a rate of three-month Libor plus 850 basis points, implying a current interest rate over 11 percent.
Human societies have learnt and forgotten these lessons several times throughout history. Misbehaviour by big financial institutions, deregulation and perverse incentives created this time the perfect storm that will continue for a long period of time to cause low growth and severe unemployment. New regulation will have to contribute to the taming of the sector’s tendency to expand beyond proportion.