U.S. Covered Bond Legislation Introduced In Congress

On June 16, 2009, Republican Representative Scott Garrett and Democratic Representative Paul E. Kanjorski jointly introduced a bill in the U.S. House of Representatives to enact the "Equal Treatment of Covered Bonds Act of 2009."¹ Representatives Garrett and Kanjorski are a Ranking Member and the Chairman, respectively, of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

In 2007, development of the nascent U.S. covered bond market was put on hold as the financial crisis unfolded. Regulatory efforts in 2008 to encourage development of the covered bonds market were well received. However, these efforts were not sufficient to launch a U.S. covered bond market both because the efforts did not allay investor concerns regarding the treatment of covered bonds upon the insolvency of an issuing bank, and because most prospective covered bond issuers were unable to act given the extreme dislocation of the capital and