"It's twenty-four years since the last time an English bank failed."
"That was Overend and Gurney. I remember it well."
"So do I. My father went broke and hanged himself in his office in Leadenhall Street."
Greenbourne was embarrassed. "I am most terribly sorry, Pilaster. That dreadful fact had slipped my mind."
"A lot of firms went down in that crisis. But much worse will happen tomorrow." Hugh leaned forward on his stool and began his big pitch. "In the last quarter of a century the business done in the City has increased tenfold. And because banking has become so sophisticated and complex, we are all more closely intertwined than ever. Some of the people whose money we have lost will be unable to pay their debts, so they will go bust too--and so on. Next week dozens of banks will fail, hundreds of businesses will be forced to close, and thousands upon thousands of people will suddenly find themselves destitute--unless we take action to prevent it."
"Action?" said Greenbourne with more than a hint of irritation. "What action can be taken? Your only remedy is to pay your debts; you cannot do so; therefore you are helpless."
"Alone, yes, I'm helpless. But I am hoping that the banking community will do something."
"Do you propose to ask other bankers to pay your debts? Why should they?" He was getting ready to be angry.
"You'll agree, surely, that it would be better for all of us if Pilasters' creditors could be paid in full."
"Obviously."
"Suppose a syndicate of bankers were formed to take over both the assets and the liabilities of Pilasters. The syndicate would guarantee to pay any creditor on demand. At the same time, it would begin to liquidate Pilasters' assets in an orderly fashion."
Suddenly Greenbourne was interested, and his irritability vanished as he considered this novel proposal. "I see. If the members of the syndicate were sufficiently respected and prestigious, their guarantee might be enough to reassure everyone, and creditors might not demand their cash immediately. With luck, the flow of money coming in from the sale of assets might cover the payments to creditors."
"And a dreadful crisis would be averted."
Greenbourne shook his head. "But in the end, the members of the syndicate would lose money, for Pilasters' liabilities are greater than its assets."
"Not necessarily."
"How so?"
