Share your insights or perspective on the financial matter presented in the input.

If I use stock as collateral for a loan and I default, does the bank pay taxes when they sell my stock?
The short answer is that the exchange of the stock in exchange for the elimination of a debt is a taxable exchange, and gains or losses are possible for the stock investor as well as the bank.   The somewhat longer answer is best summarized as noting that banks don't usually accept stocks as collateral, mostly because stock values are volatile and most banks are not equipped to monitor the risk involved but it is very much part of the business of stock brokers.   In the USA, as a practical matter I only know of stock brokerages offering loans against stock as part of the standard services of a "margin account". You can get a margin account at any US stock broker. The stockholder can deposit their shares in the margin account and then borrow around 50% of the value, though that is a bit much to borrow and a lower amount would be safer from sudden demands for repayment in the form of margin calls. In a brokerage account I can not imagine a need to repay a margin loan if the stocks dividends plus capital appreciation rises in value faster than the margin loan rate creates interest charges...  Trouble begins as the stock value goes down.  When the value of the loan exceeds a certain percentage of the stock value, which can depend on the stock and the broker's policy but is also subject to federal rules like Regulation T, the broker can call in the loan and/or take initiative to sell the stock to repay the loan.   Notice that this may result in a capital gain or loss, depending on the investor's tax basis which is usually the original cost of the stock.  Of course, this sale affects the taxes of the investor irregardless of who gets the money.