FDIC approves rule for savings banks
7/25/2012WASHINGTON -- 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