If you do not believe it is dumb have a look at my post on Opes Prime , a small broker-dealer that went down in Australia taking something near a billion in client assets with it.
So Lehman Brothers US broker dealer could take collateral of securities and if they had 100 million out on client margin loans the most that they could raise using client securities is 100 million and not a brass razoo more.
Lehman Europe failed – and the clients of the European broker dealer (read a good proportion of the London hedge fund community) are now queuing as unsecured creditors of Lehman.
