NBER: narrow funding banks will help regulate ABS market
A National Bureau of Economic Research (NBER) paper published on 10 September says a new method of securitising assets through tightly regulated narrow funding banks will reduce risks from underlying assets to investors.
Narrow funding banks are lenders whose only assets would be asset-backed securities (ABS) and high-quality, low-risk instruments, such as Treasury bills. Such banks would make their money from the income produced by their ABS holdings.
Gary Gorton and Andrew Metrick, the paper's
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