Who is liable for the drop from $30 to $2 in BSC holdings on margin loan when the customers who were long can't pay it back? Could this hurt brokers or clearing firms?
Ya think? It works llike this. Customer can't pay, come after the broker ont he account, he can't pay, go for the BD, he can't pay, go for the clearing firm, they fold Sipc. When it's over Sipc, it goes tot the 'excess carrier' who generally is AIG. How funny is that? It's like everybody having the flu, trying to treat people who have the flu. You never get better, only sicker. Who's responsible for this clusterfuck? Nutmeg??? This has your fingerprints allover it. Fess up!!!!
BTW, on a more serious note. 3.4bb is gone in an instant. Of course, that's a big drain, duh, but margin calls will come ever afternoon all week long. And they'll be particularly vicious, as everybody takes care of #1, unless of course they have a big lunch, which would lead to a #2 before they can take care of #1.
<p>If brokers were on shaky ground in the first place, it could be enough to make their problems visible for everyone to see. I am thinking of ETrade in particular. I wonder if there was anyone using margin who tried to trade BSC and got turned down?
What kind of an idiot would be long BSC on margin with no hedge? I'd be more concerned with the fact that the moron was breathing the same air as me, than the few bucks a broker MIGHT lose to such an imbecile. Yet more reason to shoot on sight, anyone that questions a conservative margin policy.
Maybe they could move Crames ( I call him Crames) spot from 2:45 to about 12:45 so we'll know what to do. Maybe he'll give us a hotline so we can front run some research call. Can you imaging these financial planning guys who diversified their customers among "high quality" mutual funds when they see their statements? Lawyers will have a field day.