Fed Calls for Backup Clearing Bank in Case of Crisis

Published on:
12 September 2006 at 10:20 a.m. ET

Written by: Unknown Author –

http://www.insidearm.com/news/00014246-fed-calls-for-backup-clearing-bank-in-cas/

The Federal Reserve on Thursday endorsed a proposal by an industry working group to establish a dormant backup clearing bank for government securities that could step into the fray in a U.S. banking industry crisis.

The proposed bank would clear and settle U.S. government securities “if a credit or legal problem caused the market to lose confidence in an existing clearing bank, and no well-qualified bank stepped forward to purchase the existing bank’s clearing business,” the Fed said.

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