The Federal Deposit Insurance Corp. is scheduled to decide two securitization-related issues Tuesday. On the FDIC’s agenda is a rule that would capital levels in line with a June ruling by the Financial Accounting Standards Board that would require financial institutions to bring back on their balance sheets certain off-balance sheet holdings, including securitizations.
The FDIC will also rule on whether to restrict its safe harbor for securitized assets linked to failed institutions. In the past the FDIC would not seize such assets from failed institutions since they were separate from a bank’s balance sheet. Now that these assets will be moved back, the FDIC needs to review its safe-harbor provision.