WASHINGTON (AP) - Federal banking regulators have proposed stricter rules for asset-backed securities, the bundles of loans that helped spark the market collapse in 2008 and the near-meltdown of the financial system.
A divided board of the Federal Deposit Insurance Corp. voted 3-2 Tuesday to propose new disclosure, risk-holding and other requirements for banks for asset-backed securities.
The securities, which are packaged loans of mortgages, credit cards or auto loans, would have to meet the new requirements so the government wouldn't seize them if the bank failed.
Banks would be required in most cases to hold at least 5 percent of the securities on their own books. The idea is that banks with such exposure to risk would be more careful about properly screening borrowers.
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