No panacea for subprime ills

Sheila Bair, chairman of the Federal Deposit Insurance Corporation, last week reiterated her view that covered bonds could be the cure for some of the ills of the US mortgage market, saying that developing the market in the US had become a “front-burner issue”. While encouraging words about the future of covered bonds in the US from such an important player are most welcome, it is perhaps better for the long term fortunes of the market if any misconceptions are cleared up early on.