Regulation X was a rule that was put into place by the Board of Governors of the Federal Reserve System with the purpose of protecting consumers and the economy of the United States.
Regulation X, in specific, was designed to regulate purpose credit. Purpose credit is a kind of credit authorized lenders such as bankers, brokers, and dealers give to people or institutions that use that credit to purchase treasury securities.
Regulation X is used when the use of purpose credit violates or exceeds the limits put in place by Regulations T and U. Regulations T and U include the rules regarding the terms and conditions regarding the offering of purpose credit by authorized lenders.
If there appears to be a violation, the Federal Reserve Board can take actions against the lenders to enforce the rules.
Click for the full glossary of credit card terms.
