The CRE Finance Council and a coalition of commercial real estate (CRE) groups sent a letter to Committee Chairman Chris Dodd (D-Conn.) and Ranking Member Richard Shelby (R-Ala.) that supported the place of covered bonds in the country's financial markets.

The letter was sent in advance of a hearing scheduled for tomorrow on covered bonds in the Senate Banking Committee.

Previously, members of the Council have testified before the House Financial Services Committee in support of H.R. 5823 or The United States Covered Bonds Act of 2010.

The legislation, which could move to the House floor for a vote this year, includes highly rated commercial mortgages and CMBS as eligible collateral.

“Today, the CMBS market is showing some important signs of life, but tremendous uncertainty remains in the market, depriving the CRE market of this important source of financing,” the coalition letter to Banking Committee leadership said. “As such, we applaud consideration of legislation that would facilitate the creation of a U.S. covered bond market in order to encourage CRE lending and investing.”

The Council and today’s Coalition of signatories think that covered bonds would offer a new and diverse funding mechanism that could provide added sources of capital and liquidity. They said that such a measure would support the CRE market as well as a U.S. economic recovery by supporting job growth as well as serving the American consumer and businesses that want to access to credit.

“The CRE Finance Council strongly supports efforts to facilitate a U.S. covered bond market as an additive financing tool," said Lisa Pendergast, managing director of CMBS strategy and risk at Jefferies & Co. and president of the Council. “We are encouraged that the Senate Banking Committee is examining how covered bonds can act as an additional source of capital.”

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