Bernanke backs covered bonds for mortgage lenders

07/11/2008 | Bloomberg

Federal Reserve Chairman Ben Bernanke said he supports an alternative to mortgage-backed securities to increase the financing pool for home loans. But Congress may first need to clarify how covered bonds would be treated in case of a bank failure, he said. Covered bonds are a primary source of financing from home and public-sector lenders in Europe. They have been used in the U.S. for about two years only by Washington Mutual and Bank of America.

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