Grappling With The FDIC's New Rule Proposals

Law360, New York (June 17, 2010, 2:15 PM EDT) -- The foundation of securitization as a financing technique is the concept of legal isolation. Specifically, the assets transferred by a company to a separate legal entity, which assets will act as collateral for securities issued by such separate legal entity, must be legally isolated from the insolvency risk of the transferor company.

In the event that such transferor company is a regulated depository institution (i.e., a bank), the insolvency of the bank would not be governed by a bankruptcy proceeding, but instead by the powers of...
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