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Relatively little can apparently be $10B: “ In 2014, for example, Oracle cofounder Larry Ellison disclosed he had used 250 million of his Oracle shares as coll

Relatively little can apparently be $10B: “ In 2014, for example, Oracle cofounder Larry Ellison disclosed he had used 250 million of his Oracle shares as collateral to secure a $9.7 billion personal line of credit.” Source: https://www.businessinsider.com/american-billionaires-tax-avoidance-income-wealth-borrow-money-propublica-2021-6?op=1&r=US&IR=T https://www.businessinsider.com/american-billionaires-tax-av...

tharkun__ 5y ago
I would not call that 'cash in hand'. I get why you see it that way but to compare it to the little guy: A credit card with a $5000 limit is not $5000 cash in hand. It's a 'line of credit' for $5000 and whether I actually have the cash to pay that back is a different story. I might actually have $0 cash in hand to pay that back and many people don't until their next paycheck arrives. Any guesses how far the Oracle share price (of ~$100) has to drop before the bank will actually use that collateral to get their cash?
- Swenrekcah 5y ago
  It is true that it’s not cash in the wallet but it’s there available if you want it. It is in no way comparable to paycheck to paycheck living. This practice also comes with all sorts of tax benefits as well. If they really need to pay some of it back then the company might decide to buy back some shares. And realistically, like the old adage says: If you owe the bank $1M it owns you, if you owe the bank $1B you own the bank.
  - tharkun__ 5y ago
    That's where collateral comes in. I guess the credit card analogy only works in the likening it to cash aspect. For the other aspects a mortgage might be a better analogy. The little guy had cash in hand for maybe 24 hours (and even then probably just a certified check). Maybe a little later, say 10 years in they get a home equity line of credit and the bank takes back the previously paid off part of the house as collateral again. I don't doubt repossession of the little guy's house is easier and happens more often than a Bezos loosing his collateral :) and for every Bezos there are probably quite a few small and medium business owners that put their businesses as collateral to get that line of credit and that did get repossessed.

tharkun__ 5y ago

I would not call that 'cash in hand'. I get why you see it that way but to compare it to the little guy: A credit card with a $5000 limit is not $5000 cash in hand. It's a 'line of credit' for $5000 and whether I actually have the cash to pay that back is a different story. I might actually have $0 cash in hand to pay that back and many people don't until their next paycheck arrives. Any guesses how far the Oracle share price (of ~$100) has to drop before the bank will actually use that collateral to get their cash?

Swenrekcah 5y ago
It is true that it’s not cash in the wallet but it’s there available if you want it. It is in no way comparable to paycheck to paycheck living. This practice also comes with all sorts of tax benefits as well. If they really need to pay some of it back then the company might decide to buy back some shares. And realistically, like the old adage says: If you owe the bank $1M it owns you, if you owe the bank $1B you own the bank.
- tharkun__ 5y ago
  That's where collateral comes in. I guess the credit card analogy only works in the likening it to cash aspect. For the other aspects a mortgage might be a better analogy. The little guy had cash in hand for maybe 24 hours (and even then probably just a certified check). Maybe a little later, say 10 years in they get a home equity line of credit and the bank takes back the previously paid off part of the house as collateral again. I don't doubt repossession of the little guy's house is easier and happens more often than a Bezos loosing his collateral :) and for every Bezos there are probably quite a few small and medium business owners that put their businesses as collateral to get that line of credit and that did get repossessed.