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When Margin Loans Go Wrong
Also CryptoKitties, enhanced stablecoins, Elon Musk's compensation and bond ETF liquidity.
Margin lending.
When a bank has a relationship with a trading client, that relationship tends to look like a bunch of contracts. There's a prime brokerage agreement that specifies how much money the bank will lend to the client and on what terms and for what collateral. There's an ISDA Master Agreement that specifies the terms on which the bank will do derivatives with the client. There are securities trades where the bank agrees to sell a bond to the client and the client agrees to give the bank money. They agree on the amount of money when they do the trade.