fund its holdings of some security, borrows short - term from a money market mutual fund, while pledging a security of greater value as collateral. the excess of the value of the security over the amount borrowed at the time of the transaction is the “ haircut ”. haircuts protect the cash lender, since, if the borrower cannot repay, or chooses not to because collateral values have fallen, the lender can take and sell the collateral to satisfy its loan. the larger the haircut is at the time of the transaction, the greater the lender ’ s protection ; that is, the greater the likelihood that that the value of the security, when sold, will exceed the amount owed plus interest. presumably, lenders assess their borrowers ’ riskiness and calibrate the amount of the appropriate haircut. regulators should require them to do this consistently and prudently across the credit cycle. haircuts tend to be cyclical : falling in good times, which adds to the growth of credit, and rising in busts, which contracts credit. a regulator could mitigate the cyclical behavior of haircuts and its consequences by establishing minimum haircuts that apply in both good and bad times. calibrating minimum haircuts to the risks and volatility expected during bad times would make lenders more secure, increasing their resilience to losses. it could also make it more expensive to fund the purchase of the securities, and so could limit the amount of borrowing that could be supported by an asset of given value ; this, in turn, might limit creditfueled increases in the asset ’ s price. in other words, by requiring increased margin, the growth of credit can be slowed and resiliency can be strengthened. regulators can also simply require margin requirements to be increased in good times. this would lean against the growth of bubbles even if regulators had not yet discerned the particular type of asset bubble growing. underwriting restrictions the final class of policies that i ’ ll discuss involves underwriting restrictions that can directly address asset bubbles and their consequences. when assets like houses are largely financed with borrowed money, it is possible to use tighter underwriting requirements to lean against credit extension and growing leverage. this could be done, for example, through regulatory actions that raise lenders ’ minimum down payment requirements or reduce borrowers ’ maximum permissible debt - to - income ratios. such measures can be taken either on a one - time basis

governors and regional reserve bank presidents in a mock meeting of the federal open market committee. participating reserve banks work in partnership with the board to bring the winning teams to washington, where the final rounds of competition will be held here in the board room. i have had the opportunity on several occasions to serve as a judge in the national finals of the fed challenge, and i can attest that the economic knowledge displayed by the students in that competition is remarkable indeed. the board also recently collaborated with many of the reserve banks on a redesigned federal reserve financial education web portal that brings many of the system ’ s resources for financial education together in one location. the site, federalreserveeducation. org, offers easy access to educational resources designed to benefit not only students, but also parents and teachers. we will continue to work to expand the resources and programs devoted to this important public purpose. i want to take this opportunity to thank the jump $ tart coalition and their partners for their continued support and commitment to furthering the financial education of our youth. now, it is with great pleasure that i introduce to you laura levine, executive director of the coalition, who will give a report on the status of financial education of youth in this country.