Wells Fargo is calling their customers saying that ALL ETFs are no longer marginable as of Sept 1st. They are doing this based on a "FINRA" alert and directed me to this page: http://www.finra.org/Investors/Prote...lFunds/P119778

This will force my investment in precious metals to decrease significantly... but it will also dramatically (I would think negatively) impact the entire ETF space... maybe even impact the whole stock market, particularly if other banks follow suit. This might negatively impact the economy....

I was aware that leveraged ETFs were getting a lot of negative attention and potential lawsuits, but to have a major brokerage cancel all margin use on all ETFs seems significant?

Why would this be happening?
1: The bank is generally concerned about ETFs and it's customer's getting in trouble with them. *cough*
2: The bank is aware of something on the horizon with ETFs that we don't know about yet.
3: The bank is simply trying to reduce it's credit exposure in general and this is a another step in "deleveraging."
4: Somebody in a high place is trying to drive dollars out ETFs because:
  • ETFs are how American's invest in the world
  • ETFs are how a lot of American's invest in commodities
What other reasons might this be happening? Fred? Eric?

What ramifications might this have on the market & economy as thousands of Wells Fargo Brokerage customers are forced to cover a margin call by either selling half their ETFs or come up with twice as much cash to maintain their current position?

This seems quite significant to me if other banks are doing it as well.