ERIC Number: ED235073
Record Type: Non-Journal
Publication Date: 1980-Dec
Reference Count: N/A
If You Borrow to Buy Stock.
Board of Governors of the Federal Reserve System, Washington, DC.
Designed for the general public and possibly suitable also for high school economics students, this pamphlet discusses a federal law that requires that the borrower as well as the lender comply with government rules relating to the use of credit in purchasing securities, even when the borrower obtains credit outside the United States. The pamphlet focuses on Regulation X, entitled "Rules Governing Borrowers Who Obtain Securities Credit," as one of four margin regulations relating to securities credit. A brief explanation of margin regulations and a description of how margin works is followed by an historical look at the essential role government regulation of securities credit plays in preventing national money crises. Concern over the potentially upsetting effects that borrowing abroad to buy U.S. stocks might have on securities markets in the United States is described as the main reason for the implementation of the law. Also discussed are the widespread effects of this law aimed particularly at foreign borrowing, and the penalties mandated for violators. The final section lists the cities in which Federal Reserve Banks can be contacted for further information. (LH)
Publication Type: Guides - General; Legal/Legislative/Regulatory Materials
Education Level: N/A
Authoring Institution: Board of Governors of the Federal Reserve System, Washington, DC.