House and Senate conferees shaping the final regulatory reform bill tentatively accepted an amendment by Rep. Scott Garrett, R- N.J. that would create a new legal and regulatory framework for the development of a covered bond market in the United States. 

Bank issuance of covered bonds backed by residential and commercial mortgages is more common in Europe. Foreign banks service and keep the mortgages on their books in a manner unlike the mortgage-backed securities used more commonly in the U.S. where the underlying mortgages have traditionally been placed in separate, off-balance-sheet trusts.

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