A bill pending in Congress would allow bankruptcy judges to cram down reductions in mortgage debt balances, upsetting what were thought to be ironclad contractual rights to collateral.
See Grano, The Right to Counsel: Collateral Issues Affecting Due Process, 54 Minn.L.Rev.
"Anytime something is not fully paid for, you're giving someone the right to attach collateral to it," he said.
Both the Bankruptcy Reform Act of 2005 and the Dodd Frank Act provide special protections for derivative counterparties, giving them the legal right to demand collateral to cover losses in the event of insolvency.
The prosecutor's concern is understandable, but the right to direct and collateral review is granted by law.
The Russian state-controlled oil company, Rosneft, which holds 49.9percentt of Citgo Holding as collateral against loans it provided to PDVSA, also stepped forward, saying a change in Citgo ownership could give it the right to sell that collateral.
If you default on a secured loan, the lender has the right to repossess the collateral.
This approach can be problematic, as it requires a degree of centralisation and trust in the issuing party which, in turn, imposes a potentially significant level of counterparty risk for the holder of the stablecoin, particularly if the holder has no security over or other rights to the collateral.
Some commercial lease agreements contain a clause that gives the landlord rights to your collateral should you default on your rent payments.
If this is the case and you're applying for an SBA loan, you'll need your landlord to "subordinate" their rights to your collateral with a Landlord Subordination Agreement, or Landlord's Waiver.
But he added, "One thing the E.C.B. doesn't want is any infringement of its right to decide on the collateral that it accepts".
