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by bdangubic 607 days ago
> TL; DR The rich don't need collateral as much as the middle class and poor.

You really buy this? Elon could just go fetch $44bn from a bank to buy Twitter without anything to back it?

2 comments

Yes, I would imagine it would be much easier for Elon to get 44bn as opposed to someone who is homeless.
> Elon could just go fetch $44bn from a bank to buy Twitter without anything to back it?

Collateral "becomes more important the more perilous the borrower is or might be." It's immaterial to "someone with a century of living expenses."

Elon Musk could probably have borrowed even $100mm unsecured on terms damn close if not identical to that which he could get on a secured loan, ceteris paribus. But Elon is uniquely leveraged. That makes him a more perilous borrower. And $44bn isn't lifestyle borrowing, either.

Nevertheless, he could still probably get a hundred million lent unsecured on terms quite close to his secured rates--there are groups who would do that for relationship building alone.