/biz/ - Business & Finance

>>53061729
Suppose a bank lent 50bn to a hedge fund against 50bn of that hedge funds collateral. Then say that 50bn was then worth 25bn, and the market didn't look like it was going to recover. Even if the bank's asset management branch may be impacted by changes in the positioning of their clients, their core equity is far more at risk of having to foot the bill to whoever the counter party is to their hedge fund client's position. Additionally, these deals are done through mostly independent regulatory agencies and clearing houses, so if they do some dumb shit to avoid obligations everyone will know.