Federal Deposit Insurance Corp. Chairman Sheila Bair confirmed plans to lengthen the temporary exemption for securitizations from failed-bank seizures.
Many have predicted such a move. The agency has yet to finish its rule restricting the exemption, and its current safe harbor for securitizations expires March 31.
"I anticipate we will be extending the … safe harbor" to allow "time for a proper rulemaking," Bair said Thursday in a Washington speech to a coalition of housing groups.
The FDIC long had a policy not to touch securitized assets in an originator's failure, as long as they met criteria for off-balance sheet accounting. But that policy was upended by a Financial Accounting Standards Board move in June to require on-balance sheet reporting for securitized assets.
In November, the FDIC said it would grandfather securitized assets under the old policy through this month, giving it time to develop longer-term conditions on receiving the safe harbor.
An advance notice of proposed rulemaking in December laid out tough restrictions, including retention requirements and a minimum period for an originator to hold a loan before it is securitized.
"Working with the industry, we are trying to better define the requirements for a well-structured securitization process in which risks can be properly evaluated and managed," Bair said.
