Pretty sure the entire loan isn't backed by the stocks it bought, eh? Then the Banks would just invest it themselves and make even more money. They want more $$$ in collateral than the stock value, since it could change in a day.
If I'm not misremembering they give you a loan requiring you buy stocks that pay dividend, and reinvesting all dividends in where they came from, allowing you only to withdraw any capital gain above cost basis, at your own tax burden, until you pay the debt otherwise they get the matured stock value plus being able to claim some kind of tax benefit.
That sounds really dirty... so banks would do it if it had a government guarantee or something. I'd still think they'd require outside (of the stocks) collateral though.
Pretty sure the entire loan isn't backed by the stocks it bought, eh? Then the Banks would just invest it themselves and make even more money. They want more $$$ in collateral than the stock value, since it could change in a day.
If I'm not misremembering they give you a loan requiring you buy stocks that pay dividend, and reinvesting all dividends in where they came from, allowing you only to withdraw any capital gain above cost basis, at your own tax burden, until you pay the debt otherwise they get the matured stock value plus being able to claim some kind of tax benefit.
That sounds really dirty... so banks would do it if it had a government guarantee or something. I'd still think they'd require outside (of the stocks) collateral though.