In Europe many funds found that the assets they pledged as collateral in return for financing from Lehman have become trapped in the bankruptcy process as administrators strain to work out which assets genuinely belong to clients.

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Also, there are reports that officials have pledged non-transferable assets as collateral, like protected forests.

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Kingfisher owner Vijay Mallya is struggling to keep the airline afloat and has pledged personal and UB Group assets as collateral against the loans.

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Under this rule supervisors should require financial institutions to value assets using a long-term moving average when they are pledged (explicitly or implicitly) as collateral for new credit.

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