In other words, unscrupulous investment bankers might see an opportunity in helping weaker banks launching covered bonds; given their circumstances, these banks will have to provide top notch collateral, ie their best remaining assets, and will probably not get a great price for them (ie the bonds will be both overcollateralised and expensive).
Either the offered price is less than what these assets could otherwise be sold for (i.e. the transaction won't happen) or it's more (in which case the price criticism doesn't make sense).
Other than that, decent but fear-mongering article. Pretty much any scheme by which you exchange cash for a set of promised future cash payments is bound to be abused at some point. There is very little new here, except that this is another quasi-guaranteed asset.
http://www.dailykos.com/story/2008/7/31/64417/6293/543/55984...