Programming note: Money Stuff will be off tomorrow, back on Monday.
Sometimes a financial asset trades for $100 one day and $5 the next. If you own it, you have a 95% mark-to-market loss. You might, for various reasons, have to sell it quickly at a loss. Perhaps you are a mutual fund and investors in your fund all want to redeem because you lost 95% of their money, so you are forced to sell the asset to raise cash. Or perhaps you are a levered investor: a hedge fund, or just a person with a margin loan. You paid for the asset with $50 of your own money and $50 borrowed from the bank, and now it is worth $5. The bank calls you up and says “hey you borrowed $50 against something now worth $5, so would you mind paying us back $45?” And you politely decline, because (1) why give the bank $45 to keep something worth $5 and (2) given the circumstances you will probably have a hard time raising the $45. So the bank seizes the asset, sells it for $5, keeps the $5 and has a $45 loss on its loan.