I have recently read the book “How to Become a Federal Criminal” by Mike Chase. Mike is a criminal defense lawyer and the man behind the @CrimeADay Twitter account. He provides an incredible public service by sifting through US Federal Criminal Law and discovering all the hilarious and head-scratching things that can get you into trouble with the FBI.
Take for instance 18 U.S.C. §842 (h), which states that (emphasis mine):
It shall be unlawful for any person to receive, possess, transport, ship, conceal, store, barter, sell, dispose of, or pledge or accept as security for a loan, any stolen explosive materials which are moving as, which are part of, which constitute, or which have been shipped or transported in, interstate or foreign commerce, either before or after such materials were stolen, knowing or having reasonable cause to believe that the explosive materials were stolen.
Now, this makes for an interesting business opportunity. I did not know that you can pledge bombs as a collateral for a loan, but apparently, the law stipulates that it is only illegal to pledge stolen explosive material for a loan that are part of interstate or foreign commerce. Of course, that means that it should be legal to pledge bombs as a collateral for a loan as long as the bombs were not stolen and/or not part of interstate or foreign commerce.
So, if I start my personal bomb-building workshop and then go to my local bank (ideally this should be a bank with a state licence not a federal banking licence), and pledge these “artisanal bombs” as collateral for loans, it would be perfectly legal for the bank to accept them. The bank, in turn could then pool many of these loans and issue a whole new category of asset-backed securities: bomb-backed securities (BBS).
The financial services industry is so good at coming up with new product ideas, I wonder why nobody ever thought of this?