Reply #38: It reads like.. if a bank can't pay the margin

[salin]

on the debt to the bank above it - in the allotted time (72 hours?), then the bank is in default and owes the entire amount of the loan to the bank above it. I would guess that then the smaller bank would have to either give its assetts (paper loans?) to the bank above it for the value of the default, and so on.

Probably banks could go bankrupt all along the chain, but assetts would be passed up the 'food chain' - and probably JPMorgan would end up with some losses, but much smaller than is current. It would only go into bankruptcy itself if enough other banks along the chain couldn't either pay up or pass assets equalling the debt up the foodchain.