Some lenders may have liquidated collateral securing about $5 billion of the fund's debt, it said Monday, but added that it did not receive any deficiency notices from those lenders who sold collateral to cover the borrowings.
Lewycka confidently bandies around opaque references to short selling, collateral debt obligations and the Fibonacci series, and if she is even half right about the goings-on inside financial organisations it appears that the epicentre of malpractice is located somewhere inside the disabled toilets.
The new deal also alters the role of the Federal Reserve, which had agreed to backstop $30 billion worth of Bear Stearns' hard-to-sell collateral, reducing JPMorgan's risk in taking over the beleaguered investment bank.
The lender can then sell the collateral to cover any loss.
That way, if there is a default by the borrower, the lender can sell the collateral and not have to wait to be paid.
When the Bear funds ran into trouble, their bankers tried to sell their collateral, which was mostly in the form of mortgage-backed derivatives.
When things went wrong, one of the brokers, Merrill Lynch, tried to sell its collateral but soon stopped when it transpired it was only succeeding in driving prices sharply lower.
When liquidating, the bank tries to sell the collateral that has been provided for as much as possible, and may initiate arbitration measures against the individual debtor (e.g., the attachment of his wages or salary).
As security the company pledges securities of companies based in Japan, Singapore and the U.S. If the Taiwanese company files for bankruptcy, can the investment bank sell the collateral to cover the loan?
