The Last Ditch by Tom Paine

FT.com / Companies / Property – Property groups in £3bn call on shareholders.

The question to ask about this article is nothing to do with real estate. These major private companies are trying to raise a further three billion pounds from the markets because their banks may call in loans. These loans are performing (i.e. repayments are being made, interest is being paid), but the banks can choose to call them in because of a technical default. In simple terms the default consists of allowing (!) prices to fall so that the debt represents more than the agreed proportion of value.

Question: Why didn't the banks go to their shareholders when they fell into the equivalent technical default for their industry; i.e. their assets proving to be worth less than they thought so that they no longer met the regulatory requirement only to lend a certain multiple of their assets?

Answer: because the taxpayers were easier to ask.