ABS Regulations Tighten for Small Banks This article first mentions the growth of community banks becoming involved in the securitization market over the past few years. Unfortunately, with this growth, the number of failures has also begun to increase. In an attempt to limit these failures the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp., recently created guidelines and are seeking restrictions to regulate asset securitization. The reason these failures are a problem is because of the expense it creates for the FDIC. The assets in reality had little to no value. However the OCC declares that these guidelines were merely a reminded to banks dealing with asset securitization rather than a response to the recent bank failures.The guidelines themselves are complicated to understand for me personally, but the people most likely to be affected are those trying to make a quick profit. Those looking for a large return and do not understand the risks are not likely to enter. An alternative to the bank's securitization would be a home-equity type loan where the property at least has significant value....
