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Published: Wednesday, 7/25/2012

FDIC approves rule for savings banks

BLADE STAFF AND NEWS SERVICES

WASHINGTON -- The Federal Deposit Insurance Corp. approved a final rule Tuesday to put new risk limits on corporate bonds in which federal and state savings associations may invest.

A savings bank isn't allowed to invest in a corporate bond when the issuer can't show it's able to meet financial commitments for the security's projected life, according to the rule approved by FDIC directors in a written ballot.

The new standard replaces the use of credit ratings, which were banned from federal regulations by the 2010 Dodd-Frank Act. Overstated credit ratings contributed to the 2008 financial crisis



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