ST Alpha - "So, the richest man in the world took out a loan and the lenders don’t think he can pay? Take the fucking collateral" (Reading a Post)

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So, the richest man in the world took out a loan and the lenders don’t think he can pay? Take the fucking collateral

Posted by Will Hunting (aka JoeMetz) Aug 20 '24, 09:22

And the property from him.

Like you would if Jim Bob couldn’t pay your mortgage loan.

Responses:

If it’s not great from the banks’ point of view, doesn’t that mean it’s good from Musk’s point of view? -- nm - mara Aug 20, 10:41 2
- No. A failing company isn't good for anybody. But it does seem like Musk really doesn't care about losing this money. -- nm - pmb Aug 20, 10:49 1
  - He's not in it for the long haul. He just wanted to try to overthrow democracy and increase his influence. He appears to have failed at both. - David Aug 20, 10:55
It’s not about them thinking he can’t pay, but thinking they could find a bigger sucker to take it off their books. -- (edited) - znufrii Aug 20, 09:45 1
- Their only hope now is for interest rates to drop far enough that the rate premium offsets the risk discount -- nm - znufrii Aug 20, 09:57
Isn’t this what they all do? Take out bigger and bigger loans to always be in debt and never have to pay taxes (or very much in taxes) -- nm - Trending Aug 20, 09:30 1
- this is a tax loophole I wouldn't mind seeing closed -- nm - rollo Aug 20, 10:20
The collateral isn't worth the value of the loan. He's also, apparently, not in default. -- nm - pmb Aug 20, 09:29 10
- He's still making payments so no default. On a more reasonable level of principle, kind of a dream customer. - JD Aug 20, 09:33 4
  - Nope. That's not how it works for these loans. They have a maturity date (probably 5 years). At that point the loans are due. Usually they will be - pmb Aug 20, 09:37 3
    - They’ll have to take a haircut on the principal, for sure, but that’s a five-years-from-now problem -- nm - znufrii Aug 20, 09:54 1
      - Only about 2 years at this point. That’s when they start thinking about exits. -- nm - pmb Aug 20, 10:00
    - Ah. Thanks for the explanation. Hence the whole hung description. - JD Aug 20, 09:39
- How is that possible? Isn't the purpose of collateral to get something of equal or greater value? -- nm - David Aug 20, 09:30 4
  - if the collateral is stock share and the price drops... -- nm - Max Aug 20, 09:33 3
    - Then congrats on now owning 5% of Tesla or whatever he pledged. - Will Hunting Aug 20, 09:40 1
      - Banks do not want to own things -- nm - decline Aug 20, 09:57
    - but then you build in the equivalent of a margin call to the transaction so the lender is never less than fully secured (forget the term) -- nm - mr mooch Aug 20, 09:38
I wouldn't be surprised if he wasn't required to back the loans except for with perhaps the business itself and they don't want that -- nm - JD Aug 20, 09:26
I presume they worry he'll never work with them again, which would make me say "Thank God." -- nm - David Aug 20, 09:24 1
- Meanwhile, who ends up footing the bi--Oh, right. -- nm - con_carne Aug 20, 09:32

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So, the richest man in the world took out a loan and the lenders don’t think he can pay? Take the fucking collateral

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