Covered bond amendment will boost US financing

Author: Nicholas Pettifer | Published: 20 Nov 2009

A likely amendment to the Financial Stability Improvement Act should encourage covered bonds in the US. If passed, the rules will offer similar features to European covered bonds legislation.

Congressman Scott Garrett detailed an amendment to the Act on Wednesday. Despite the fact that he immediately withdrew it, there are encouraging signs that it will pass and the plans have been well received.

“The amendment is really quite good,” said Jerry Marlatt, structured finance partner at Morrison & Foerster. “In some ways it is very similar to much of the legislation in Europe where, if the bank is insolvent, the protected pool of assets is set aside.”...