Word: borrows
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Dates: during 1970-1970
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Commercial paper is simply a written promise to pay issued by a company that wants to borrow money for a short period (usually 90 days, never longer than nine months) and generally bought by another corporation that has some spare cash to lend. The issuer need not register with the Securities and Exchange Commission, give the buyer a prospectus or back the promise with collateral. His word is his bond...
...years ago, commercial paper was issued mostly by finance companies that wanted to raise money to relend to consumers. But when money became hard to borrow, big industrial corporations stepped up their marketing of paper through Wall Street brokerage houses as a way to raise otherwise unobtainable cash. Since 1965, the amount of commercial paper outstanding has more than quadrupled to $39.7 billion. At present, $1 of commercial paper is outstanding for every $2 of business loans by large commercial banks. Last year there was a $12 billion increase in commercial paper and a $15 billion rise in bank loans...
...open-handed policy might be inflationary. But Federal Reserve officials are also pledged not to permit a wave of corporate bankruptcies, and last week they acted to make sure banks have enough cash to meet demands from corporations seeking loans to pay off commercial paper. They invited banks to borrow more money directly from the Federal Reserve system itself. The Fed also removed the ceilings on interest that banks can pay on short-term certificates of deposit. These rates then jumped from about 61% to 8%, which is just about the going level for commercial paper. The rise should encourage...
...establish a Securities Investor Protection Corp. (abbreviated SIPC and pronounced sipic) that would insure each investor's account for as much as $50,-000. SIPC would be empowered to raise an initial fund of $75 million, and eventually $150 million, from brokers. In a pinch, it could also borrow up to $1 billion from the Treasury to pay off customers of insolvent brokers; it would repay the loans by assessing solvent brokers...
...kind of Homestead Act that would make stock, rather than land, available to people who lack the cash or credit to buy it. He envisages creation of a federal agency to insure "capital diffusion loans," much as the Federal Housing Administration insures mortgage loans. He would empower banks to borrow funds directly from the Federal Reserve for such lending...