More than $1 trillion in stock-backed loans close to margin call eruption

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Morgan Stanley is cashing in on risky, stock-backed loans (2017)

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.

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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.

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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.


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