A Covered Bonds Boost
Monday, July 28, 2008
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Treasury Secretary Henry Paulson put the focus on covered bonds today. These bonds are like mortgage backed securities, except they require banks to keep the risk. NBR correspondent Stephanie Dhue explains financial regulators hope to boost the use of these bonds in the U.S.
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Highlights of Covered Bonds
| Covered Bonds |
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- Banks keep loans on their balance sheets |
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- If loans default, assets replaced |
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- Incentive to ensure loans repaid |
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Related NBR Stories & Links
- 07-18-08: The Citigroup Billion Dollar Loss Barometer
- 06-05-08: Credit Rating Agencies Get an Overhaul
- 03-25-08: "Commentary" - Questions & the Housing Crisis
- 12-03-07: Treasury Secretary Henry Paulson Jumps into the Mortgage Mess
- 07-10-07: The S&P's Subprime Mortgage Warning Sparks a Sell Off
External Links/Articles*
- Bank of America
Bank of America is one of the largest commerical banks in the United States. The company's corporate treasurer, Jeff Brown, is interviewed in Stephanie Dhue's report. This links to a July 28, 2008 press release issued by Bank of America titled, " Banc of America Securities Announces Support of Covered Bond Market." - European Covered Bond Council (ECBC)
The ECBC is the voice of the covered bond industry in Europe. Covered bonds have greater popularity as a debt instrument in Europe than they do in the U.S. This links to the "About Covered Bonds" section of the ECBC website. - Federal Deposit Insurance Corporation (FDIC)
The FDIC "protects the first $100,000 of deposits that are payable in the United States." The FDIC worked with the U.S. Department of the Treasury and other financial regulators to develop guidance on the covered bond market. This links to a July 15, 2008 press release issued by the FDIC titled, "FDIC Board Approves Final Covered Bond Policy Statement." - Federal Reserve
The Federal Reserve is the central bank of the United States. The Fed worked with the U.S. Department of Treasury and other financial regulators to develop guidance on the covered bond market. This links to a copy of the July 28, 2008 remarks made by Fed Governor Kevin Warsh. The speech is titled, "Remarks on Covered Bond Framework." - U.S. Department of the Treasury
This links to a copy of the statement Treasury Secretary Henry Paulson made on July 28, 2008. The statement is titled, "Secretary Henry M. Paulson, Jr. Statement on Covered Bond Best Practices."
*Clicking these external links will take you off the NBR web site on PBS.org. NBR has no affiliation with these sites.
