When bank in “good faith” has not relied on stock as collateral.

CFR · 2024-01-01 · US · Title 12

(a) The Board has received questions regarding the circumstances in which an extension or maintenance of credit will not be deemed to be “indirectly secured” by stock as indicated by the phrase, “if the lender, in good faith, has not relied upon the margin stock as collateral,” contained in paragraph (2)(iv) of the definition of (b) In response, the Board noted that in amending this portion of the regulation in 1968 it was indicated that one of the purposes of the change was to make clear that the definition of (1) The bank had obtained a reasonably current financial statement of the borrower and this statement could reasonably support the loan; and (2) The loan was not payable on demand or because of fluctuations in market value of the stock, but instead was payable on one or more fixed maturities which were typical of maturities applied by the bank to loans otherwise similar except for not involving any possible question of stock collateral.

official document · source cfr-2024 · id 12:§ 221.117