MARGIN DEBT ISN'T THE PROBLEM

摘要

The volatility story you often hear is this: Americans are borrowing like mad from their brokers to buy stocks. Leverage is making the stock market seesaw violently. So the Federal Reserve should raise margin requirements on broker loans to calm things down. The logic seems impeccable, but the facts are different. The Fed should stick to its current plan: Crack down on the few brokers that overlend to unprepared investors, and leave margin requirements at 50%, where they have been since 1974. For the most part, the system is working. Brokerage firms are taking the unpopular but necessary step of raising margin requirements on scores of volatile stocks, or barring loans on them entirely.