Breakingviews | Rehypothecation

Considered view

25 Sep 2008 16:35

Sort it out

About Us

Breakingviews.com is the world's leading source of agenda-setting financial insight. breakingviews has 25 correspondents and columnists based in London, New York, Paris, Washington, San Francisco and Madrid. Our aim is to become the lingua franca for the global financial community. Our real-time subscription service currently reaches around 15,000 financial professionals such as investment bankers, senior corporate executives, hedge fund managers, lawyers and private equity professionals.

We reach a broader audience of nearly 4.5m investors and opinion-formers via columns in the following influential newspapers: The New York Times (USA), The Telegraph (UK), The International Herald Tribune, Le Monde (France), El Pais and Cinco Dias (Spain), Handelsblatt (Germany), La Stampa (Italy), NRC Handelsblad (Netherlands), The National (UAE), The Business Times (Singapore), Mint (India) and L’Agefi (Switzerland).

Lehman used $22bn of hedge funds’ collateral for its own purposes. This murky practice – rehypothecation – provided funds with cheap leverage in good times. But they are now in a long line of creditors. The practice should be changed – though doing so will raise hedge fund costs.

Sign up for a free trial to read the rest of this subscriber-only content, or if you are already a member please sign in here.

Forgotten your password? Get a password reminder.