Though a Federal Financial Institutions Examination Council policy limits the types of of mortgage-backed securities derivatives that regulated financial institutions may hold. there still is concern on the part of an important politician that banks and thrifts are taking unacceptable risks.
Last week. Chairman Donald W. Riegle Jr., D-Mich., of the Senate Banking, Housing and Urban Affairs Committee asked three regulators to study the institutions they oversee to determine whether holdings of MBS derivatives threaten the safety and soundness of the banks and thrifts. The request came June 10 at a hearing on the Bank Insurance Fund, at which the committee heard testimony from John P. Laware, a member of the Federal Reserve Board; William Taylor, chairman of the Federal Deposit Insurance Corporation; and Stephen R. Steinbrink, acting comptroller of the currency.