US securitization and mortgage industry groups said a Federal Deposit Insurance Corp. plan for overhauling part of the $4trn asset-backed securities market could restrict credit and undermine economic recovery. The FDIC proposal requiring sellers of securitized loans to keep 5 percent of credit risk in exchange for protection that makes the bonds more attractive to investors “could greatly inhibit its effectiveness and the restart of the markets,” Tom Deutsch, executive director of the American Securitization Forum, said in a comment letter filed with the agency today.
FDIC securitization rule may harm markets, industry groups say
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