"I used to work in a business
that, among other things, helped clients get financing against securities. One
thing that you learn quickly in that business, and then spend the rest of your
career trying to forget, is that the simplest way to get financing against
securities is to sell them. You’ve got $100 of stock and want to borrow $80 of
cash against it? Just sell the stock, now you have $100, you’re welcome. "
"In the no-balance-sheet transactions, Deutsche Bank received the collateral, sold it and used the cash to make the loan. By selling the collateral — government bonds, in the deals reviewed by Bloomberg News — Deutsche Bank created an obligation to return the securities, allowing it to net to essentially zero its assets and liabilities, the documents show. … Deutsche Bank was able to sell the collateral because it didn’t have to return the bonds under the terms of the agreement. Instead, the borrower agreed that Deutsche Bank could return the “cheapest-to-deliver” equivalent in the event of default, the documents show."
"In the no-balance-sheet transactions, Deutsche Bank received the collateral, sold it and used the cash to make the loan. By selling the collateral — government bonds, in the deals reviewed by Bloomberg News — Deutsche Bank created an obligation to return the securities, allowing it to net to essentially zero its assets and liabilities, the documents show. … Deutsche Bank was able to sell the collateral because it didn’t have to return the bonds under the terms of the agreement. Instead, the borrower agreed that Deutsche Bank could return the “cheapest-to-deliver” equivalent in the event of default, the documents show."
