Great Article Summarizing Securitization Risks

We didn’t see rehypothecation (pledging, re-using, hypothecating) mentioned in my Mortgage or Note, did you? We certainly wouldn’t have agreed to that either.

Risks and rewards have increased as collateral is rehypothecated, i.e., used by lenders for their own purposes. Such leveraging allows lenders to become borrowers. Mark-to-market practices, shorting and rehypothecation thus increase risks for the financial system. [e.s.]”

see http://www.ipsnews.net/2019/06/financialization-promotes-dangerous-speculation/ This was originally hailed as a brilliant financial innovation as US Fed chair Alan Greenspan believed that CDOs transferred risk from banks to investors able and willing to take it on. But securitization not only increased systemic risks, but also did not reduce risk to the originating banks who had sold off the loans.…

Source: Great Article Summarizing Securitization Risks

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