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Cover Me: The Economy is on Fire (the German Pfandbrief)

German Law Journal, Vol. 11, No. 12, p. 1323, 2010

24 Pages Posted: 16 Jan 2011  

Patrick Quirk

Ave Maria School of Law; Thomas More Law School; Bond University School of Law

Date Written: December 1, 2010


This article examines the German Pfandbrief ('covered bond') as an example of the banking practice of 'originate to hold' by which mortgage debts are retained on the balance sheet of the originator and not sold on to a third party such as an investor or hedge fund. The global financial crisis (GFC) of 2008-2009 will be forever linked to the process known as 'securitization' and the distribution of mortgage-backed securities throughout willing and later remorseful financial markets. But this is not the only model. As a member of the Executive Board of the European Central Bank (ECB) noted in June of 2008, 'It may be worth recalling that this [originate to distribute model] is not the way banks have historically done business. Under the traditional - perhaps, I should say secular - 'originate to hold' business model, banks extend loans to firms and households and hold them in their balance sheets until they mature or are paid off.'

This article will consider European 'aversion' to securitization outline the history of the German Pfandbrief. It will examine specific provisions of the Pfandbrief laws, including licensing, supervision, the cover register, risk management, issuing structures, and insolvency privileges.

Keywords: Covered Bond, Pfandbrief

Suggested Citation

Quirk, Patrick, Cover Me: The Economy is on Fire (the German Pfandbrief) (December 1, 2010). German Law Journal, Vol. 11, No. 12, p. 1323, 2010. Available at SSRN:

Patrick Quirk (Contact Author)

Ave Maria School of Law ( email )

1025 Commons Circle
Naples, FL 34119
United States
(239) 687-5303 (Phone)
(239) 687-5340 (Fax)


Thomas More Law School ( email )

Level 20, Tenison Woods House, 8-20 Napier St
North Sidney, NSW 2060

Bond University School of Law ( email )

Gold Coast, QLD 4229
+61 7 55 95 1111 (Phone)
+61 7 55 95 2246 (Fax)

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