** Banks listed in the ITF document (the committee representing them) are under no binding legal obligation to participate in the debt exchanges, and may turn out to own less Greek debt than currently believed. [Note: bank participation in the Latin Brady bond era was high, since at the time, banks held almost all the paper, and in the form of illiquid loans]. The big question: would Germany still live up to the deal if Greece missed deficit targets or assets sales, if bank participation was too low, or if hedge funds (once referred to by the Chairman of the German Social Democratic Party as a “swarm of locusts’’) reaped large free rider windfalls? Ultimately, this is a political question. If “yes”, Germany will underwrite Greece no matter what; if “no”, then a broader, coercive Greek restructuring might follow in the not-so-distant future. What the EU gave: an easing of lending conditions, and an expanded role for the EU lending facility (EFSF) * Another 109 bn for Greece, allowing the country to continue to pay off maturing debt (to those not participating in the exchanges) * Rate on new EU loans to Greece, Portugal and Ireland cut to 3.5%, maturities on new & old loans extended from 7.5 to 15-30 years * 10 year grace period on interest on new EU loans to Greece; the unpaid interest accumulates “ EU loan facility has the ability to buy sovereign debt in the secondary markets, including a plan to purchase 40 bn of Greek debt (most likely including much of the Greek debt purchased by the ECB) * EU loan facility has the ability to lend to countries (even those not in an IMF program) to recapitalize their banks * Language (with no specifics) regarding the use of EU structural funds to boost growth in Greece What the EU gets: more austerity, Maastricht with teeth (?) and private sector involvement in Greek debt rollover * Legally binding national fiscal framework to be developed by end of 2012; fiscal deficits brought to 3% by 2013 at the latest * Private sector involv