On Tuesday, the House Financial Services Committee will hold a hearing on covered bonds backed by high-quality mortgages and consumer loans, a European market some U.S. legislators believe could become more influential in the U.S. and help fill in the gap left by the still-moribund MBS market.

Rep. Scott Garrett, R-N.J., is hoping the hearing will lead to legislative action in the spring and help provide liquidity for the U.S. mortgage market. European banks have issued $180 billion in covered bonds backed by high-quality mortgages and consumer loans this year while U.S. mortgage securitization, outside of the government sponsored or guaranteed market, has been virtually nonexistent.

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