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Exam CRCM topic 1 question 123 discussion

Actual exam question from ABA's CRCM
Question #: 123
Topic #: 1
[All CRCM Questions]

Under Regulation U, prior to extending credit secured by margin stock for more than $100,000, a national bank must obtain which of the following?

  • A. Certificate of value for the collateral
  • B. Written statement from the borrower as to the purpose of the loan
  • C. Written statement certifying the borrower's business address and daytime phone number
  • D. Notice from the borrower as to his willingness to provide additional margin stock as collateral
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Suggested Answer: B 🗳️
by Cam22 at March 16, 2024, 2:09 a.m.

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Cam22
4 months ago
Selected Answer: B
Under Regulation U, which governs the extension of credit by banks for the purpose of buying or carrying margin stock, a key requirement is for the lender (in this case, a national bank) to obtain a written statement from the borrower detailing the purpose of the loan. This requirement is crucial because Regulation U places restrictions on the amount of credit that can be extended for the purpose of buying or carrying margin stock, and the purpose statement helps ensure compliance with these restrictions.
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