TD Waterhouse posted this gem for their clients today: FYI: Reduced Loan Value for Select US Securities SUMMARY: This information is relevant to margin accounts only. Due to recent market events, effective immediately, TD Waterhouse has reduced the loan value for 27 securities in the US Financials sector to 50%. In addition, the loan value of Lehman Brothers stock has been reduced to 0% and E*Trade Financial Corp has been reduced to 25%. Please refer to the list of affected securities below: Americredit Corp Anworth Mortgage Asset C Ashford Hospitality Trust China Direct Inc CIT Group Inc Compucredit Corp Corus Bankshares Inc Country Wide Financial Crp Downey Financial Corp Heritage Financial Group E*Trade Financial Corp FC Stone Group Inc First Marblehead Corp Lehman Brothers MF Global Ltd MGIC Investment Corp WIS National City Corp Newcastle Investment Corp Old National Banccorp Inc Penson Worldwide Inc PMI Group Inc Radian Group Inc Rait Financial Trust Redwood Trust Inc Resource Capital Corp Temecula Valley Bancorp Triad GTY Inc Washington Mutual Inc Western Alliance Bancorp MARGIN ACCOUNT IMPACT: If you are holding any of these listed securities in your TD Waterhouse account, your loan value and available margin will be reduced until further notice. CONTACT INFORMATION: If you have any questions or concerns, please contact an Investment Representative. They did the same thing for tech when the tech bubble started to unwind.
Looks like buying puts on some of these stocks may be a good strategy. Some will be forced to sell their stocks, and with less margin others may not be tempted to buy them in the future. No demand=lower price.
They're not the first ones to tell clients those stocks are crap so a lot of that is priced into the puts. You'll be paying top top dollar/implied volatility for those already.
These restrictions would also reduce one's ability to short. So less buying demand, but also less selling demand.