As I understand it the case held the securities of all customers with margin loans.
How about writing down margin loans to people who make bad stock decisions through no fault of their own?
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Outstanding margin loans total a paltry 1.5% of the value of shares listed on the New York Stock Exchange.
Local banks appear to share the confidence, extending margin loans for up to 90% of the initial share price.
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Part of the recent surge in margin loans may be entirely rational.
Longer term, Kleinbard suggests keeping high-dividend-paying stocks in a separate, all-cash account that has no margin loans, thus keeping the shares off-limits to shorts.
Some say they are slashing trading commissions and loan fees and trimming collateral requirements for margin loans made to buy more stocks, bonds, commodities and currencies.
Madoff is a liar and a thief, but he may have also provided Jeffry Picower with one of the largest zero-interest margin loans in history.
Margin loans are frequently available to investors with smaller balances but tend to be more expensive and don't come with perks like the option to fix rates.
Morgan Stanley estimates that nonpurpose loans have been rising "at a double-digit clip" for the past four or five years while margin loans have been flat or down.
If you have taken out margin loans totaling 50% of your brokerage assets, you should think of that half of your money as no longer belonging to you.
The business will become even more attractive to commercial banks next year when new capital standards mean banks can set aside less capital against margin loans to hedge funds.
Margin loans may finance only 1.5% of the value of the New York Stock Exchange but prices are set by those in the market on a given day, among whom the margin men are concentrated.
Meanwhile, he and his son were looting Ultimate Holdings by taking distributions from a company which had no real assets, since the GENI stock was effectively valueless but the margin loans against the stock were still outstanding.
Interest on margin loans has become a big source of revenues for some online brokerages (23% at Ameritrade, 17% at Schwab), which might suggest that they are less concerned than they should be that their clients are borrowing wisely.
New capital requirements that take effect next year will make the business more attractive to commercial banks, which right now have a disadvantage to the brokers because they have to set aside more capital against margin loans to hedge funds.
However, these branches deliver just 9% of Lloyds' profit - largely because what's being sold is in effect a low-margin mortgage bank, without the benefit of all the other higher margin loans and products that Lloyds also sells its millions of customers.
That can be a nice business, but the real margin is in making loans, investing assets, insuring assets, or settling transactions.
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When Enron's stock began to significantly slide, the banks issued margin calls, fearing their loans might be in jeopardy.
Given these credit stats, it follows that second-lien loans are wide-margin product taken primarily by relative-value investors, arrangers say.
The spread between short and long rates is effectively the gross operating profit margin banks can make on their next loans.
The criticism of them is that they tempt banks, which have to pay a premium to buy the deposits, to make riskier loans to keep a profitable margin.
Unlike its more profitable private sector rival HDFC Bank, ICICI is ready to sacrifice short-term net for gaining market share, as it did in undercutting HDFC's long-standing lead in mortgage loans. (Overall, ICICI's net interest margin of 2.25% is less than half that of HDFC Bank's 4.72%.) Similarly, ICICI has overtaken Citibank as the country's largest issuer of credit cards, with 8.5 million cards issued to date.
Isaacson reasons the terms of the loans made them "nonrecourse" (meaning the employee's other assets weren't at risk) and that 1971 IRSregs on nonrecourse loans mean the shares shouldn't have been valued and taxed until the margin call, when they were worth less.
Bond insurance guarantees investors will get their principal back if borrowers default on their loans, but First Marblehead will have to pay premiums that will shave its profit margin, he noted.
By keeping the yield curve flat, QE2 pressures banks to make more higher-return loans as investing in treasuries and short-term facilities provides a lower and lower profit margin.
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Questions arose over loans taken out by McClendon and how he was funding the investments, several years after margin calls during the financial crisis forced him to sell a substantial portion of his stake in the company.
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