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FE D E RA L RE SE R V E BANK
O F NEW YORK
Circular N o. 4 8 6 0 1
March 8, 1960
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AMENDMENT TO REGULATION U
Loans by Banks for the Purpose of Purchasing
or Carrying Registered Stocks
T o A ll Banks, and Others Concerned,
in th e Second Federal R eserve D istrict:
Enclosed is a copy o f an amendment to Regulation U that the
Board of Governors o f the Federal Reserve System has adopted,
effective today. The following statement on the purpose o f the amend
ment was made public yesterday by the Board of Governors:
The purpose o f this amendment is to restore the language o f
paragraph ( b ) (1) of Section 221.3 as it stood before June 15, 1959, in order
to avoid administrative problems arising under the provision that has been
in effect since that date. However, the Board is concerned with evasive
extensions o f bank credit for the purpose o f carrying registered stocks and
expects banks to be alert in detecting and preventing attempts to circumvent
the basic purposes o f this regulation.
Additional copies of this circular and the amendment will be
furnished upon request.
A
l f r e d
H
a y e s
,
President.
LOANS B Y BANKS FOR THE PURPOSE OF
PURCHASING OR CARRYING REGISTERED STOCKS
A M E N D M E N T TO R E G U L A T IO N U
I ssu e d
by the
B oard
op
G overnors
of t h e
F e d e r a l R e se r v e S y s t e m
Effective March 8, 1960, paragraph ( b ) ( 1 )
Regulation U is amended to read as follow s:
o f section 221.3 o f
( b ) ( 1 ) No loan, however it may be secured, need be treated
as a loan fo r the purpose o f “ ca rryin g” a stock registered on a
national securities exchange unless the loan is as described in
section 221.3(&) (2) or the purpose o f the loan is to enable the
borrow er to reduce or retire indebtedness which was originally
incurred to purchase such a stock, or, if he be a broker or dealer,
to carry such stocks fo r customers.
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@FedFRASER