Federal Deposit Insurance Corp. (FDIC) Acting Chairman Martin Gruenberg expressed his support for the development of a U.S. covered bond sector at the American Securitization Forum's (ASF) annual meeting. The gathering is being held in Washington D.C. this week.
During the question and answer part of his presentation, Gruenberg was asked about his views on the market. He noted that former FDIC Chair Sheila Blair was an early supporter of covered bonds as a way for financial institutions to fund themselves.
He noted too the issue related to the rights of covered bond holders in an FDIC conservatorship or receivership.
"I am hoping this issue can be resolved," Gruenberg stated. "There is value in developing a covered bond market in the U.S."
In a separate panel, Cory Wishengrad, co-head of securitized products origination at Barclays, said that the advantages of covered bonds is that it does not use an originate-to-distribute model and is 100% risk retention.