# kaal:claim:1558614-001

**Claim.** German banks' exposure to CDO risk ran through credit enhancement and liquidity guarantees given to off balance sheet conduits, and because that exposure was often kept out of their accounting the inherent risk only surfaced once the CDO market collapsed.

**Type.** failure  **Support.** evidenced

**Holds when.**

- banks guaranteeing conduits located outside German banking supervision
- guarantee exposure not consolidated into bank accounts

**Source quote.**

> was often hidden and not included in their accounting. The in- herent risk of the guarantees to the banks, however, became appar- 10 ent when the market for CDOs collapsed.

**From.** Painter and Kaal, *Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in* (2010), I.A. The Financial Crisis in the United States and Germany, page 3

**Cite as.** Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614

**Verify.** sha256 of source PDF `e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Painter%20and%20Kaal%20-%202010%20-%20Initial%20Reflections%20on%20an%20Evolving%20Standard%20Constraints%20on%20Risk%20Taking%20by%20Directors%20and%20Officers%20in.pdf

**Failure mode.** hidden guarantee exposure  (family: disclosure-ineffectiveness)

**Topics.** risk-and-incentives, systemic-risk, disclosure

**Keywords.** off-balance-sheet-risk, german-banks, cdo-crisis, disclosure-failure, bank-supervision

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.