Get Backstop, Lose Backstop
Yesterday, we noted an interesting new provision in the Corker-Warner bill: denial of any form of federal support to the holder of first-loss RMBS tranches backed by the new FMIC. Here, we go into this in depth because this language has the potential to repeal Dodd-Frank’s orderly-liquidation authority (OLA) systemic-resolution protocol for any financial company that chooses to get into this game.
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