Financial Stability Board to probe securitization more closely
A closer look at securitization and securities lending regulation is necessary as the Financial Stability Board continues to brainstorm ways to stabilize and oversee the shadow banking system, the FSB said Thursday. The FSB was created to develop and promote international regulatory and supervisory powers to ensure systemically important financial firms do not pose risks to global economies. The securitization model became a heated topic after the 2008 financial meltdown when toxic mortgages packed into securities defaulted, causing panic in the financial markets. Focusing on regulation of securitization and securities lending is only one area of focus for the task force. In addition, the oversight body will look at the regulation of banks' interaction with shadow banking entities, regulatory reform of money market funds and oversight of shadow banking entities. The results of its study will be released in a report on recommendations for strengthening oversight of the shadow banking system and international economy at the G20 summit in October. Write to: Kerri Panchuk.