The American Securitization Forum (ASF) expressed strong support for the new legislation designed to promote the issuance of covered bonds in a letter sent to Congress today.
ASF's letter stated that a legal framework for a covered bond market is necessary so that the asset class can be used a viable alternative for consumer credit as the economy attempts to recover.
Also, the industry group reiterated its stance that the proposed legislation, H.R. 940 The United States Covered Bond Act of 2011, creates the correct structure to effectively establish a lasting U.S. covered bond market.
The letter was sent to Chairman Spencer Bachus and Ranking Member Barney Frank of the House Financial Services Committee, and Chairman Scott Garrett and Ranking Member Maxine Walters of the Subcommittee on Capital Markets.
Although the ASF acknowledged that increased covered bond issuance could possibly take business away from the securitization market, it still maintains its support for the legislation. The ASF believes that the two asset classes complement each other, citing similar success in Europe.
“We also believe both types of securities are necessary to get credit flowing again to the U.S. economy,” said Ralph Daloisio, chair of the ASF board of directors.