[quote=Allan from Fallbrook]SK: Except, in this instance, that is not how collateral works. In this instance, Goldman was well within their rights to step in and seize the collateral and not have to wait in line. [/quote]

Can you give a quick explanation on this? Thinking it through, it makes sense that the collateral wouldn’t be the impaired assets, but I don’t understand how counter-parties to the contract would have anything other than an uncollateralized obligation. What assets exactly would they be asserting their ownership? They certainly didn’t have the right to sieze the TARP money.