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, applauded the introduction of legislation in the Senate today by Senators Kay Hagan (D-NC) and Bob Corker (R-TN) to establish a U.S. covered bond market. In March, Garrett and Maloney introduced legislation in the House, the United States Covered Bond Act of 2011, to help facilitate a robust covered bond market in the U.S.
"I am pleased that Senator Hagan and Senator Corker have joined Rep. Maloney and me in our effort to establish a thriving U.S. covered bond market," said Garrett. "The introduction of the Hagan-Corker bill in the Senate demonstrates there is broad, bipartisan appeal for the creation of a covered bond market in the U.S. Senators Hagan and Corker recognize how important it is that we seek out new and innovative ways to unlock capital; they know we must consider creative ways to enable the private sector to provide additional mortgage, consumer, commercial and other types of credit. I look forward to working in close consultation with them to expedite consideration of legislation in the House and Senate to facilitate the creation of a U.S. covered bond market."
"Covered bonds are an idea whose time has come. With introduction of legislation in the Senate, we are taking one step closer to bringing this market to the United States in an efficient and well-regulated way," said Maloney. "I believe that if we get the structure right and give the regulators the tools they need to implement a covered bonds program, then we will have provided financial institutions with a new source of liquidity so they, in turn, can extend credit more readily. I look forward to working with my colleagues in the Senate to ensure that this bill becomes law."
Covered bonds have been used in Europe for decades to help provide additional funding options for the issuing institutions and are a major source of liquidity for many European nations' mortgage markets. The purpose of United States Covered Bond Act of 2011 is to create a legislative framework for U.S. covered bonds. This framework will enable credit to flow more readily from the capital markets to households, small businesses, and state and local governments in a way that enhances stability of the broader financial system. The core elements of the legislative framework are legal certainty for covered bond programs and public supervision by federal regulators.