this post was submitted on 07 Oct 2024
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Banks don't take this into consideration when assessing collateral?
Lol, who downvotes a question?
There are completely different rules when you are that rich. Look at Trump, he bankrupted how many businesses and banks STILL lined up to loan him money. At the very top, your trading favors and power.
Take what into account? They basically look at current valuations and offer loans up to some fraction of that amount.
And that's generally the way the ultra-rich operate, they don't actually sell anything, they just borrow against their assets. They punt the can down the road until they die, at which point those unrealized gains get stepped up in basis for those who inherit it. If you have enough stock assets, you can service the debt with the capital gains you're forced to realize (i.e. dividends).
So the bank sees someone with $100B in assets asking for a $10M loan or whatever, and they're completely happy to offer that, because even if the stock gets cut in half, he can still pay the debt.