# kaal:claim:1558614-002

**Claim.** The German ABCP conduit model, which financed long term American mortgage loans with short term paper and pocketed the spread, was profitable only for as long as new buyers for the short term paper could be found, so the model collapsed the moment institutional buyers withdrew.

**Type.** mechanism  **Support.** evidenced

**Holds when.**

- long term assets funded by short term asset backed commercial paper
- sponsor bank provides credit enhancement and liquidity to the conduit

**Source quote.**

> A signifi- cant downside of this business model, however, was liquidity and re- sale risk—profiting through the spread only worked while the con- duit (i.e. Rhineland Funding) found buyers for the ABCP it issued

**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.** maturity mismatch funding run  (family: liquidity-and-market-structure-failure)

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

**Keywords.** maturity-mismatch, abcp-conduits, liquidity-risk, german-banks, financial-crisis-2008

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