How the US Tax Code helps the rich get richer at our expense:

[Igel]

5. They pay interest.

But the interest is lower because it's secured debt, not like credit card debt that's reliant on your word (and FICO score). More like a mortgage, since there's an asset that can be cashed out, at least in theory, to cover the debt if you can't make payments.

And if you cash out you're subject to paying taxes on the unrealized capital gains on the securities, as well (or, if it's at a loss, you get credit against other capital gains income).

Problem with using securities as collateral is that the debt owner can quickly be found to be "underwater" just like beaucoup house mortgagees were in 2009 if the valuation of the securities drops. Yes, if they can make payments on the debt nobody might care, but not infrequently the lenders will call for additional collateralization to cover the shortfall if it's too big a drop.