http://blog.rivast.com/?p=2905 A blog about rules and behaviours Sun, 05 Sep 2010 15:35:38 -0700 http://wordpress.org/?v=2.8.4 hourly 1 http://blog.rivast.com/?p=2905&cpage=1#comment-307 admin Mon, 23 Nov 2009 12:45:10 +0000 http://blog.rivast.com/?p=2905#comment-307 The repurchase part, as I understand it, of a repo is a senior obligation. So any unsecured amount after the collateral is liquidated is a senior claim against the repurchaser. Clearly in order to change that, and provide a minimum 20% haircut, a new legal framework for the resolution of financial institutions would be needed. It seems that there may be the political will to do that. In effect a bank would not go bankrupt, but rather would go through a different process, with different outcomes for creditors. The repurchase part, as I understand it, of a repo is a senior obligation. So any unsecured amount after the collateral is liquidated is a senior claim against the repurchaser. Clearly in order to change that, and provide a minimum 20% haircut, a new legal framework for the resolution of financial institutions would be needed. It seems that there may be the political will to do that. In effect a bank would not go bankrupt, but rather would go through a different process, with different outcomes for creditors.

]]> http://blog.rivast.com/?p=2905&cpage=1#comment-305 Siram3 Sun, 22 Nov 2009 19:09:57 +0000 http://blog.rivast.com/?p=2905#comment-305 dWj made an interesting comment over @ the Across the Curve post you are linking to. Will this proposal really impact the repo market? I am no legal expert either but are repos, from a legal perspective, secured credit? From my layman's perspective I think a repo is distinctly different from a normal secured credit claim, especially in case of a bankruptcy. dWj made an interesting comment over @ the Across the Curve post you are linking to. Will this proposal really impact the repo market? I am no legal expert either but are repos, from a legal perspective, secured credit? From my layman’s perspective I think a repo is distinctly different from a normal secured credit claim, especially in case of a bankruptcy.

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