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Article: A Barrier For Covered Bonds May Soon Fall: FDIC payment delay seen discouraging useful funding tool.
- Article from:
- American Banker
- Article date:
- February 22, 2008
- Author:
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WASHINGTON -- Covered bonds may become a more popular funding source as federal regulators move to assuage creditor concerns.
The Federal Deposit Insurance Corp. appears ready to remove a regulatory barrier that imposes a 90-day delay on creditors' collecting on the bonds from a failed bank.
The delay gives the FDIC time to sift through the bank's assets, but issuers complain it blocks U.S. banks from entering a fertile market, because the disincentive for investors to hold covered bonds - which are more popular in Europe - makes them more expensive for banks.
"We believe that there's a real opportunity in the U.S. to have a vibrant covered ...