FDIC to insure mortgages?


FDIC chairwoman Sheila Bair just told the Senate Banking committee that her agency is studying ways to insure (potentially) hundreds of thousands of mortgages.

It’s an unprecedented proposal for the agency. Bair said the new authority comes from the “bailout bill” approved by Congress earlier this month. Banks would have to renegotiate troubled mortgages, perhaps lowering the interest rate or extending the repayment period. In return, the FDIC would guarantee the mortgages, much the way it guarantees bank deposits.

But the guarantee program would also expose the FDIC to even more financial risk.

Bair didn’t offer many details on the plan during her opening statement; we’ll see if legislators ask about it during the hearing.


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