Dictionary definition of “take a haircut”

take a haircut

v. phr. (in finance) to accept a valuation or return that is less than optimal, especially to partially forgive a debt. Subjects: English, Money & Finance, Slang

Editorial Note: A related term is take a bath, meaning “to suffer substantial or complete loss (of an investment).”

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Citations: 1970 Terry Robards New York Times (Aug. 16) “On Wall Street, Some Fail, All Worry” p. 3-6: When securities are used, the brokerage firm take a “haircut” on their value. This means that, for capital purposes, they are valued at somewhat less than their market prices. How much less is up to the stock exchange. 1982 N.R. Kleinfield @ Valley Stream, Long Island New York Times (June 30) “Living A Corporate Nightmare”: The intent of such sessions is to identify what creditors will settle for. “But there was no goal seeking,…other than that everyone wanted 100 cents on the dollar. I think that nobody wanted to accept their fate, which was that everybody had to take a haircut.” 2000 Jerry Knight Washington Post (Nov. 20) “Evaluating FBR’s Earnings: ‘Haircut’ or a Close Shave?” p. E01: To account for the fact that the shares cannot be sold, FBR uses an accounting technique known as a “liquidity discount,” or, in the jargon of Wall Street, “taking a haircut.” Back to your house, the one with the value that increased to $300,000 from $200,000. If you decide to take out a home equity loan to pay your child’s college tuition, most lenders won’t let you borrow the full $100,000 increase in value. They’ll lend you only 80 percent of the value, which means taking a haircut of 20 percent. 2005 Salil Tripathi Guardian (U.K.) (July 8) “Writing off the debt”: When individuals or businesses go bankrupt, banks are forced to take what bankers euphemistically call “a haircut.” 2006 Ed Christman Book Standard (Aug. 11) “Tower Headed For Chapter 11”: D’Amico “did one dastardly deed, and now he is missing in action and won’t talk to anybody,” the major-label financial executive says. “There hasn’t even been an ‘ask’ yet.” By that, he means Tower has not requested an extension to make payments or for suppliers to “take a haircut”—music-industry parlance for partially forgiving money owed.

Posted 17 Aug 06 | Permalink | Tell a Friend

Reader comments:

This phrase was also popular during the Argentian Debt Crisis earlier this century

See “And the Money Kept Rolling In (and out)”

Page 82 on google books:
http://books.google.com/b ooks?vid=ISBN1586482459& id=oDdD87HSx2oC&pg=PA 82&lpg=PA82&vq=ha ircut&dq=and+the+mone y+kept+rolling+in&sig =rGCQaVs8QNDIwUeRwvq0fm8h UfA

by John 17 Aug 06, 0417 GMT