Corruptions you should know about: Rehypothecation

Hypothecation from Wiki:

Hypothecation is the practice where a borrower pledges collateral to secure a debt. 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 consumer enters into a mortgage agreement, in which the consumer’s house becomes collateral until the mortgage loan is paid off.

The detailed practice and rules regulating hypothecation vary depending on context and on the jurisdiction where it takes place. In the US, the legal right for the creditor to take ownership of the collateral if the debtor defaults is classified as a lien.

Rehypothecation is a practice that occurs principally in the financial markets, where a bank or other broker-dealer reuses the collateral pledged by its clients as collateral for its own borrowing.

Investopedia on Rehypothecation.

Unlimited rehypothecation explained:

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17 Responses to Corruptions you should know about: Rehypothecation

  1. Issac Maiezl says:

    People ignore or laugh at this kind of scary financial stories. It can’t happen, it is not happening, it won’t happen to them. This, as well as the excellent reviews some other people have written, are of no help to poeple who make decisions on the basis of TV news.

  2. DIABLO 3 GOLD says:

    In these days of austerity as well as relative anxiety about incurring debt, a lot of people balk resistant to the idea of utilizing a credit card to make purchase of merchandise or maybe pay for a holiday, preferring, instead to rely on a tried as well as trusted approach to making repayment – raw cash. However, if you possess cash on hand to make the purchase completely, then, paradoxically, this is the best time for them to use the credit card for several motives.

  3. makoney says:

    This is one good article.

  4. fakir says:

    Nothing but crooks! A revolution is needed.

  5. slay dragon says:

    Nice post.

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  8. Untidy says:

    Hi, of course this piece of writing is truly fastidious and I have learned lot of things from it on the topic. Thanks.

  9. Michael Kropp says:

    We know about it, but there is nothing we can do.

  10. Louis Flie says:

    It is so amusing, I almost wished it to be the truth.

  11. Christian Lender says:

    Bad times are coming.

  12. guc xenon says:

    It is too late to do anything about it. The people do not care.

  13. ッチ 激 says:

    Very amusing.

  14. R Satrele says:

    Knowledge is power, but only for some.

  15. Amelia says:

    Interesting. Cattivi in tutto.

  16. Cheap Shot says:

    I don’t want to know! I don’t appreciate this post.

  17. Ne Cirette says:

    The system is corrupt and those people even more so.

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