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May a depository institution pledge a structured debt obligation containing sub-prime mortgages in the underlying collateral?

April 26, 2017containing debt Depository institution mortgages obligation pledge structured Sub-Prime underlying

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May a depository institution pledge a structured debt obligation containing sub-prime mortgages in the underlying collateral?

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Debt obligations containing subprime mortgages are acceptable as collateral if they meet Federal Reserve Bank acceptability requirements, including credit quality and tranche type. AAA-rated collateralized debt and mortgage obligations are examples of acceptable structured debt obligations.