WASHINGTON — With regulators struggling to decide which loans to excuse from risk-retention, Federal Deposit Insurance Corp. Chairman Sheila Bair said Thursday the best option would have been to shelve the exemption altogether.

Under provisions in the Dodd-Frank Act requiring securitizers to hold 5% credit risk, several agencies — including the FDIC — must define a "qualified residential mortgage", a new class of safe mortgage not subject to retention.

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