United States

Ahead of Tuesday’s House Financial Services Committee hearing, Congressman Scott Garrett spoke exclusively to The Cover’s Neil Day yesterday (Thursday) about his push for the development of a US covered bond market and the chances of legislation being passed. Read the full interview here.

Congressman Scott Garrett told The Cover yesterday (Thursday) that he is optimistic that covered bonds can gain bipartisan support and also overcome the concerns of the Federal Deposit Insurance Corporation, in an exclusive interview before next Tuesday’s House Financial Services Committee hearing.

We don’t normally do this but, hey, it’s nearly Christmas: this Washington Post story on Neel Kashkari – former assistant Treasury secretary, TARP czar, and lead official on the last administration’s covered bond push – is too good to miss.

Howard Goldwasser, formerly of Allen & Overy, has joined Curtis, Mallet-Prevost, Colt & Mosle as a partner in the firm’s New York office.

A commitment to hearings on covered bonds from Barney Frank, chairman of the House Financial Services Committee, two weeks ago promised the biggest breakthrough for the asset class in the US in 18 months, but the detail of the legislation proposed by congressman Scott Garrett that elicited Frank’s statement was of a similarly game-changing nature. The Cover spoke to market participants about what such legislation would mean for the development of covered bonds in the US.

Barney Frank, chairman of the House Financial Services Committee, on Wednesday committed to a hearing on covered bonds in December in response to Republican congressman Scott Garrett’s proposed amendment to the Financial Stability Improvement Act of 2009.

Bank of America’s covered bond programme was downgraded from Aa1 to Aa2 by Moody’s yesterday (Tuesday), after the bank decided against increasing the amount of committed overcollateralisation to a level consistent with a Aa1 rating.

The Federal Reserve has for the first time assigned US covered bonds their own buckets at its discount window, giving them recognition that had been sought by proponents of the instrument in the US.

Legislation proposed by two congressmen does not, according to Moody’s, address the rating agency’s core concern that the cover pool of outstanding US covered bonds would have to be liquidated within 120 days of a sponsor bank default.

Compagnie de Financement Foncier has begun putting in place the necessary documentation to establish a 144A MTN programme to sell its covered bonds into the US, and is hoping to overcome potential obstacles to its application. Meanwhile, the French issuer yesterday (Thursday) tapped a Swiss franc bond.

Bank of America is considering whether to make changes to its covered bond programme to support its rating, after Moody’s downgraded the covered bonds from Aaa to Aa1.

Jerry Marlatt, who sits on the US Covered Bonds Council steering committee, has left Clifford Chance and joined Morrison & Foerster.