In 2008, all financial institutions around the world were facing financial pressures. All banks are active in the bond market and one of the best performing assets for a long time was mortgage backed securities. When people are genuinely vetted for their ability to finance a mortgage, the default ratio will be very low. By 2008, in order to get more product in the marketplace and not caring about vetting, mortgages for 1% down or lower were being offered. It is not surprising many went underwater as soon as they were refinanced at higher rates and mortgage backed securities began to default on a massive scale. When that happen the banks, in order to keep on the plus side of the regulators needed a capital infusion. In the case of Barclays Bank they sold equity to the oil state Qatar.

In 2008 with all bank executives trying to raise money for their institution, who can lend and how to structure a deal was seemingly blurred. In an article by Lawrence White and Kirstin Ridley of Reuters, the British banking regulator – the Serious Fraud Office believed Barclays had asked Qatar for an investment on one hand, and arranged to give them a $3 billion loan or the size of the investment on the other. If the purpose was for a public company in Britain are normally prohibited from lending money for the purchase of their own shares know as “financial assistance”. The executives at Barclays argued they did not bring the rules and a court believed them.

Linking to dividend paying stocks, all companies have rules and regulations they need to abide by and the rules and regulations tend to followed better when a company is making money. When they are desperate for additional capital, rules and regulations are fudged till the crisis is solved. Upon solving the crisis, the company goes back to following the rules. It is easier to invest in a profit making company rather then a company losing money.

There are more questions than answers, till the next time – to raising questions.