Rocky, hello. Good to talk to you again.
I do not have a Schwab account but I will call the local office on Tuesday and inquire if they would be interested in my transferring my account to them and if I would be eligible for one of their "Securities Lending Fully Paid (SLFP) accounts".
I just scanned their agreement and I did not like section #4. "What are the disadvantages to the client?" where it states "The client loses SIPC protection for the security on loan. To offset this risk, the loan is secured by a ‘Letter of Credit’ issued by a Large National Bank unaffiliated with Schwab. The client in the event of default by Schwab can draw upon this Letter of Credit may be the only source of satisfaction of Schwab’s obligation to the client in the event that Schwab fails to return the loaned securities."
It would seem to me that Schwab could issue a "letter of Credit" for shares, say, at .50 and as share value rises notify you that they are defaulting on the agreement and you are left with the "Letter of Credit" for your shares at .50 while share value rises to .60, .75, $1 and, hopefully/possibly much higher.
I realize that under section #10 "the client may sell the loaned securities at any time" but, if Schwab has notified you of default then you "the client" is out of luck and left holding the dirty end of the stick.
Rocky, just the ramblings coming from an old man's mind.
I will let you know what, if anything, I find out Tuesday.
SAM I AM
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