US Treasury Secretary Paulson announced today that the four largest US banks are prepared to create a market for a new kind of product to help free up liquidity in the mortgage market. This type of action is needed to get the Santa Rosa real estate market going again.
Covered bonds, issued by banks and secured by pools of
assets like home loans, are widely used in Europe but have only
become attractive in the United States since the segment of the
mortgage securitization market driven by investment banks dried
up last year amid a wave of foreclosures.
He said that Bank of America (NYSE:BAC - News), Citigroup (NYSE:C - News),
JPMorgan Chase (NYSE:JPM - News) and Wells Fargo (NYSE:WFC - News) said they intend
to establish covered-bond programs "and kick-start this market
in the United States."
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clipped from biz.yahoo.com
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