We are unaware of any express prohibition against using trust preferred stock as collateral for a loan, provided that the trust preferred stock has not been issued by the lending bank or its affiliate. Trust preferred stock is a security, and we are unaware of any rationale why it would be treated differently than other types of securities for purposes of pledging the security as collateral for a loan.
Is there any law or regulation that would prevent trust preferred stock from being used as collateral for a consumer loan?
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