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But whats the future look like with Rehypothecation



Rehypothecation is when your broker or bank, to whom you have hypothecated - or pledged - securities like a property as collateral for a loan, pledges those same securities to another commercial bank or other lender like JP Morgan or Goldman Sachs to secure a loan to cover the firm's exposure to potential margin account losses. When you open a margin account, you sign a general account agreement with your broker or bank, authorize your broker to rehypothecate your loan. The borrower retains ownership of the collateral, but it is "hypothetically" controlled by the creditor in that he has the right to seize possession if the borrower defaults. A common example occurs when a home owner enters into a mortgage loan in which the home owners house becomes collateral until the mortgage loan is paid off.








In the UK, theres no limit on the amount of a clients asset that can be rehypothecated which is dangerous so thats why many merchant banks and commercial banks are based in the UK even Bernie Madoff & Lehmans. The way out is except if the client has negotiated an agreement with their broker that includes a limit or prohibition. In the US, re-hypothecation is capped at 140% of a client's debit balance.

So what happens is this: a home owner seeks a mortgage from his bank. The Bank then sends the title secured to the parent bank and thenb this bank may wish to borrow so in fact remortgages your title to a merchant bank to gain access to funds. Prime brokers are not protected by Client Money Protection, so the investment banks are extending finance and leverage to you, as they want to access as much of your assets and the cash as possible. This is a problem with Hedge funds. The norm for prime brokers is to have almost no restrictions, so they can freely move assets in and out of clients’ accounts to generate revenue for themselves.


MF Global customer funds have now reached $1.2 billion in the red as they used client money that cannot pay back. The funds missing had been misappropriated by MF Global as it desperately sought to avoid bankruptcy.   MF Global took advantage of an asymmetry in brokerage borrowing rules that allow firms to legally use client money to buy assets in their own name - a legal loophole that may mean that MF Global clients never get their money back. A Wall St manipulation of brokerage rules allowed for the wholesale acquisition and sale of client funds through re-hypothecation. A loophole allowed MF Global, and many others, to use its own clients’ funds to finance an enormous $6.2 billion Eurozone repo bet--- but it failed and the company has collapsed.


bSure thing as nearly 1 billion kiwi $$$ are invested with Banks etc for kiwisaver the thought of your funds being subject to Rehypothecation is real. If the world economy goes into overdrive is your funds safe. Well perhaps not for if the Banks go belly up then your funds will go with it. Buy property in your name and rent or lease then you have control of your own asset base not some broker who only wants profit ands doesn't care about your investment.



The USA can collapse as the Bankers look for other ways to make $$$




[ Whats Rehypothecation -mortgages ] [ EU beginnings & Greece debt -why ] [ EU Treaty of Maastricht ] [ How USA Investment Banks made millions ] [ USA Investment Banks ][ Colonialism returning to Libya a lie ] [ Colonialism USA wants Libya oil ] [ Afghanistan Corruption under Kazai ]

[ Save NZ Farms for Kiwis: STOP ] [ Building Tax depreciation NZ ] [ Hubbard vs Securities Commission ] [ Banks & Subprime Mortgage ] [ Failed Finance Companies ] [ Kiwisaver good or bad Providers ] [ Bank Lending Report ]

WHY ARE MANUFACTURERS & BUSINESSES LEAVING NZ: [ Read the story ] The issues are economics nothing else and many a time the owner is blamed for moving when in fact he has no say in the matter otherwise he will go bust. However read the reasons why NZ has lost the plot ---[ Compare to Thailand ] & why more factories are heading abroad now. It makes sense.[ Check WHY THAILAND ] is better for Manufacturers & any Kiwi Company. Why NZ is lost [ NZ Deficit increases ] Yes we owe money????? [ Government $250m a week borrowing ][ Kiwi Family Savings Plan ] [ Benefit cuts good or meaningless ] [ Quit smoking-heres how ] [ Levin Business dying ] [ NZders lose out ] [ World population exploding ]

" Invest in finance companies--- crazy--- they can do what they like with your $$$$ "

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