Latest topics
» Crop Circles 2020 - Lauragais, France - 30 May 2020
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyToday at 9:55 am by PurpleSkyz

» Dave "The Jailed" Schmidt (Meta 1 Coin Scam) Team Must Confirm Compliance Or Face Additional Court Orders!
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyToday at 9:09 am by PurpleSkyz

» JailBird Dave Schmidt (Meta 1 Coin Scam) Robert Dunlap Says The SEC IS Harassing Them - Newsletter! (LMAO!!!)
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyToday at 9:06 am by PurpleSkyz

» Man describes 'UFO air battle' encounter
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyToday at 8:59 am by PurpleSkyz

» UFO News ~ 5 Dark Knight Satellite & 2 UFOs Rectangles, 2 Triangles Invisible (2 Pyramids) in Arkansas plus MORE
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyToday at 8:57 am by PurpleSkyz

» The Covid Lockdown is Terrorism
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyToday at 8:51 am by PurpleSkyz

» Mind of Media
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyToday at 8:49 am by PurpleSkyz

» Google Earth User Claims He Found Entrance to Area 51
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyToday at 8:41 am by PurpleSkyz

» The way Toward Peace
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyToday at 8:35 am by PurpleSkyz

» What's Going On? Comets SWAN, Lemmon, NEOWISE, ATLAS, ENCKE and More
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyToday at 8:32 am by PurpleSkyz

» Dave Schmidt (Meta 1 Coin Scam) Zoom Meeting Just Happened! If We Know About It, So Does The SEC!!!
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyYesterday at 11:25 pm by RamblerNash

» Dave Schmidt - warrant executed
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyYesterday at 11:12 pm by RamblerNash

» Dave Schmidt arrested- Meta 1 Coin STILL post ing YouTube vids!
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyYesterday at 11:10 pm by RamblerNash

» UFO News ~ Sightings From North America Of UFO Orbs Flying In A Triangular Formation plus MORE
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyYesterday at 3:35 pm by PurpleSkyz

» Did the Simpson's Predict George Floyd's Death?
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyYesterday at 3:22 pm by PurpleSkyz

» Venus Will Turn Into A "Ring Of Fire"
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyYesterday at 1:17 pm by PurpleSkyz

» Tonight's Sky: June
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyYesterday at 1:16 pm by PurpleSkyz

» Giant Ancient OOPArt Found In Java?
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyYesterday at 1:15 pm by PurpleSkyz

» #QTard Drama Theater - Groups Infiltrated w/paid Bad Actors- All assets deployed plus MORE
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyYesterday at 1:14 pm by PurpleSkyz

» Dr. Steven (struggling to stay relevant) Greer - UFO's, Consciousness, and Meditation
HOW REHYPOTHECATION OF COLLATERAL WORKS....  EmptyYesterday at 1:12 pm by PurpleSkyz







***********

CLICK THE SUBSCRIBE BUTTON BELOW TO RECEIVE OUR DAILY NEWSLETTER

A 2ND EMAIL COMPLETES THE ACTIVATION PROCESS




CLICK THE PURPLE BUTTON TO VIEW OUR LATEST POSTS







You are not connected. Please login or register

OUT OF MIND » PERCEPTUAL AWARENESS » THE SHIFT IN CONSCIOUSNESS » HOW REHYPOTHECATION OF COLLATERAL WORKS....

HOW REHYPOTHECATION OF COLLATERAL WORKS....

Go down  Message [Page 1 of 1]

1HOW REHYPOTHECATION OF COLLATERAL WORKS....  Empty HOW REHYPOTHECATION OF COLLATERAL WORKS.... on Wed Oct 09, 2013 11:29 pm

PurpleSkyz

PurpleSkyz
Admin
HOW REHYPOTHECATION OF COLLATERAL WORKS....

HOW REHYPOTHECATION OF COLLATERAL WORKS....  Rehypothecation
How the Value of Collateral is Damaged
http://www.batr.org/negotium/100913.html

Rehypothecation of Collateral
Before you get a headache or a pain in your side, rehypothecation is not as difficult to understand as spelling the word. Definition of 'Rehypothecation':

“The practice by banks and brokers of using, for their own purposes, assets that have been posted as collateral by their clients. Clients who permit rehypothecation of their collateral may be compensated either through a lower cost of borrowing or a rebate on fees.

In a typical example of rehypothecation, securities that have been posted with a prime brokerage as collateral by a hedge fund are used by the brokerage to back its own transactions and trades. While rehypothecation was a common practice until 2007, hedge funds became much more wary about it in the wake of the Lehman Brothers collapse and subsequent credit crunch in 2008-09.

In the United States, rehypothecation of collateral by broker-dealers is limited to 140% of the loan amount to a client, under Rule 15c3-3 of the SEC.”

Well, now that it is clear, isn’t it? Still need a better explanation, watch the video Rehypothecation .



Look at the practice as a giant musical chairs orchestra, conducting a continuous symphony. As long as the tune plays, the multi pledged collateral is safe from foreclosure.

Consider that the entire fiat paper financial system is based upon a promise to pay. The original capital plus the interest juice is incorporated within the pledge from the borrower to the lender. However, in the real world only the super privileged and connected negotiate market rate or below, loans without collateral. For the rest of the garden-variety beggars that need to go hat in hand to scrounge money, they had better be willing to put up security for the note obligation.

Of course, unsecured credit card usury rates are the exception to manageable interest rates.

In the realm of high finance the rules for swinging deals takes on surreal implications when leveraging, gearing and syndication pooling share the risk by pledging security instruments to gain loan approval.

The complications are that such guarantees often do not hold unencumbered rights to the underlying security. Obtaining insurance coverage to warrant the value of the collateral is one way to satisfy the lender. Add to this expose the practice of re-insurance when the original underwriter books out their portions of the default risk to another more daring insurer.

While the security industry rules limit the percentage of rehypothecation, do not forget this is the same fraternity that invented the practices of derivatives and swaps.

The subscription service, Risk.net, offers this assessment in the article, WGMR rehypothecation rules unclear and confusing , say lawyers.

"The rules are contained within new margin requirements for uncleared derivatives , the final version of which was published on September 2 by the Working Group on Margining Requirements (WGMR), a body run jointly by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions. The decision to allow strictly limited rehypothecation of customer assets comes after the WGMR initially appeared to rule the practice out in its first July 2012 consultation document . A subsequent February 2013 ‘near-final' paper asked whether some rehypothecation should be allowed with strict controls , but the latest iteration of the rules is the first time the conditions for rehypothecation have been fleshed out in detail.

The WGMR stipulates that customer assets collected as initial margin on uncleared derivatives trades can only be rehypothecated to a third party to hedge the dealer's derivatives position arising out of transactions with customers for which initial margin was posted. This collateral can only be rehypothecated once – so, the third party would not be able to re-use the assets again.

Any rehypothecated initial margin must be treated as customer collateral and segregated from proprietary assets – a condition that extends to the third party after rehypothecation. Crucially, the customer must also be protected from the risk of loss of initial margin in the event the dealer or third party, or both, collapse."

Do you really believe that any set of rules will prevent the security brotherhood from comingling customer funds? Maybe putting Jon Corzine, the MF Global Holdings guru in charge of regulation enforcement would bring clarity to a complex system of double-dealing.

Sure, such an expert on circumventing the law would be the optimum sheriff to round up the rehypothecation bandits. Well, just understand the significance that the lawyers and barristers acknowledge, in the WGMR report.

"Cash is fully fungible, making it difficult to segregate from other assets, lawyers point out. Full title to the cash is given to the dealer, and all the customer has is a contractual claim for repayment of an equal amount of cash, meaning it would effectively rank as an unsecured creditor in the event of a default. In contrast, securities posted as collateral under a security interest arrangement can be segregated and traceable."
Oh golly, the smoking gun verbalized by the officers of the court . . .

The depositor relinquishes their ownership of funds to the security dealer. When the music is over, turn out the lights. Maybe the message from the Jim Morrison’s song is a warning to investors and borrowers alike. Just close the door on the opaque scheme to overestimate the underlying value of collateral security.

When the only recourse to recoup your losses rests upon an unsecure creditor status in a bankruptcy, the capital formation of the economic system ceases to function. Conversely, before the borrower rejoices that the financial institution takes a mortal hit to their balance sheet, the collapse of liquidity brings hardship to the entire economy.

Common sense in banking is gone. Indemnity protection in securities is worthless. If left to the financial elites to rescue the paper monitory structure, the gnomes of default will just rehypothecate the entire system by claiming the same ownership, of all-collateral as the financial dealers take full title to your cash.

This is how you have become the unsecured creditor of your own assets. When You Wish Upon A Star , Anything your heart desires – REHYPOTHECATION - Will come to you.
James Hall – October 9, 2013

Subscribe to the BATR Realpolitik Newsletter Posted by Obi-Wan Kabuki at 3:33 AM


Thanks to: http://americankabuki.blogspot.com



  

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum