Of course that is not known at all, but it’s also why Jefferson is asking for information, oversight and assistance. He’s trying to ensure his investments get the maximum return. This is a world he knows well as he has years of experience with trust preferreds, a type of debt this involves. I asked him what a trust preferred is and he explained.
“It’s a form of debt that banks could count as equity. It was created in 1996 and every bank went out and issued as much as they possibly could. Because if you thinks about it, if you’re a bank and you need to have 10% in what’s called tier one capital and that’s equity, they were basically saying 25% of your tier one capital could be in this new instrument. And what the regulators made these banks do, what the trust preferred is, it needs to be 30 years in 10 years, and if you have a problem you have to be allowed to defer for five years before going into debt, normally you’d have 30 days.”
“In 2010-2016 there were 1400 banks in the universe with these CDO’s, 400 of them were deferred and most because regulators told them to defer…”
