The House Financial Services Committee has approved legislation aimed to support the growth of the U.S. covered bond market with wide bipartisan support. The bill, named H.R. 940 The United States Covered Bond Act of 2011, passed by a vote of 45-7-3.
The legislation was introduced by Rep. Scott Garrett (R-NJ), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, and Rep. Carolyn Maloney (D-NY), Ranking Member of the Financial Services Subcommittee on Financial Institutions and Consumer Credit.
The success of covered bonds in the European market as an effective alternative funding and liquidity option has caused many to advocate for the development of the industry in the U.S., as noted in a release on Garrett’s Web site.
Twenty-two organizations have already submitted letters of support for the legislation, including the American Securitization Forum (ASF), which publicly and strongly endorsed the cause yesterday. For ASR's coverage of ASF's letter, please click here.
Garrett expressed his excitement that the bill would soon be considered on the House Floor and reiterated the potential of covered bonds in the release.
“Our economy continues to face serious challenges on the road to recovery and the lack of available credit only makes things more difficult for America’s job creators to begin hiring again,”, he stated. “A U.S. covered bond market will both generate increased liquidity in the credit markets and level the playing field for U.S. financial institutions to better compete with their foreign counterparts.”