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Seeking Safety

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Investors seeking safety frequently purchase U.S. government securities. Nonetheless, some investors lost over $750 million operating in the government securities market within the past five years. These losses were not incurred because the government repudiated its debt, of course, or even because of falling prices of outstanding government securities (in fact, prices were rising much of this time). Rather, losses arose from failures of securities firms with whom the investors were dealing. And out of the ensuing debate and calls for reform has come the Government Securities Act of 1986.

Investors seeking safety frequently purchase U.S. government securities. Nonetheless, some investors lost over $750 million operating in the government securities market within the past five years.

These losses were not incurred because the government repudiated its debt, of course, or even because of falling prices of outstanding government securities (in fact, prices were rising much of this time). Rather, losses arose from failures of securities firms with whom the investors were dealing. And out of the ensuing debate and calls for reform has come the Government Securities Act of 1986.


Suggested citation: Stevens, Edward, 1987. "Seeking Safety," Federal Reserve Bank of Cleveland, Economic Commentary, 04.15.1987.

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