Fed officials push FDIC-like backstop for ABS markets

While the call for the creation of a catastrophic insurance fund for mortgage-backed securities has been gaining ground in recent weeks, two leading Federal Reserve Board economists are poised to push the concept one step further, suggesting a backstop for all asset-backed securities. According to an unpublished paper provided to American Banker, the central bank officials are proposing to create a deposit insurance-like system for the secondary market.

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