By MARTIN CRUTSINGER, AP
WASHINGTON- The Bush administration and federal banking regulators joined with the nation's four largest banks Monday to endorse a new way to pump money into the battered U.S. mortgage market.
Treasury Secretary Henry Paulson unveiled a set of best practices designed to encourage banks to issue a debt instrument known as a covered bond. The administration hopes these bonds will replace some of the mortgage financing that has disappeared as investors have incurred billions of dollars of losses on mortgage-backed securities.
"As we are all aware, the availability of affordable mortgage financing is essential to turning the corner on the current housing correction," Paulson said in launching the new effort.
"We are at the early stages of what should be a promising path, where the nascent U.S. covered bond market can grow and provide a new source of mortgage financing," he said.
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