More than $1 trillion in stock-backed loans close to margin call eruption
— Daniel Lacalle (@dlacalle_IA) July 17, 2018
Morgan Stanley revealed Tuesday that it’s making a bundle selling risky loans that allow its clients to use stocks and bonds as collateral.
The Wall Street goliath saw its best ever quarter for so-called securities-based loans, which have raised concerns because they can slam investors if there’s a sharp market downturn.
The financial powerhouse headed by James Gorman said Tuesday its overall profits rose 12 percent during the third quarter to $1.78 billion, boosted by its business in managing money for its ultra-wealthy clients.
But the bank also reported $40.1 million in income from securities-based loans, up 18 percent from last year, the most ever — and just six months after the bank paid a $1 million fine for securities-based loan sales contests that The Post first exposed last year.