Make Me Whole!

Banks in the United States have long operated under a set of rules called Know Your Customer. The current liquidity crisis has turned the table requiring borrowers worldwide to know their lenders. The law of supply and demand has raised the cost of funding prohibitively and as banks try to raise funds daily to meet their obligations they are faced with the unknown.
Historically, the loan agreements between borrower and lender provide for an interest rate comprised of a base rate, in almost all cases LIBOR, plus a margin. LIBOR was a proxy for the bank’s cost of funds even though most banks borrowed below that rate keeping the difference as incremental margin. With the advent of Basle II, the concept of base rate had to expand to allow for

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