The relationship would still be with the building society or other institution, but the individuals' loans are identified. However, under the provisions of the Bill, the bond holders cannot lose at all. I am not arguing with the Minister for adopting this approach, because nobody would take up the bonds if this was not the case. However, it is somewhat different from a normal commercial securitisation, in that in so far as the bond holder is concerned, theoretically a book of individual loans will be identified, but regardless of whether the mortgagee or holder defaults, the bond holder will get his guarantee, in addition to the SPV, which will get the money that should have been paid into it.
Much of the Bill, therefore, consists of enabling sections to allow the principle to be followed through, even though it is really a guaranteeing by the State that the bond holders and the SPV will be paid, come hell or high water. I have no disagreement with the Minister in taking this route, but it is somewhat different from a normal securitisation. This is done more frequently in the USA than anywhere else. Am I correct in making these assumptions?