SIFMA and ASF form US covered bonds council

The jointly sponsored Council will be a collaborative forum through which a diverse group of market participants will promote the U.S. covered bonds market. The group will focus on the development of market policies and practices that uphold public confidence in U.S. covered bonds. The Council will further represent the industry's interests through constructive dialogue with legislative, regulatory and other policymaking bodies.

"The members of the Council believe that covered bonds can and will offer a vital complement to existing funding sources for financial assets, particularly mortgage products," said Sean Davy, managing director at the Securities Industry and Financial Markets Association. "The ability for financial institutions to economically fund consumer credit is essential to our economic recovery. Given market dislocations and the introduction of government-guaranteed debt alternatives for depository institutions, it may take somewhat longer to jump start this market. However, this pause allows us the opportunity to further develop the covered bonds framework and educate market participants on the covered bond asset class and its differences from other debt securities."

The Council will be led by a steering committee comprised from a rotating group of issuers, investors, dealers and legal advisors. The initial steering committee will include representatives from Bank of America, Barclays Capital, BlackRock, The Capital Group Companies, Citi, Clifford Chance, Deutsche Bank Securities, J.P. Morgan, Merrill Lynch & Co., Orrick Herrington & Sutcliffe LLP, PIMCO, RBS Greenwich Capital, Sidley Austin LLP, TIAA-CREF, and Wells Fargo.

The Council will operate primarily through its working groups and committees including a Regulatory and Legislative Working Group, a Technical Issues Working Group and a Traders Committee. These working groups and committees will benefit from the input of a large and diverse group of market participants.

The Council has established dialogue with the European Covered Bond Council and will seek to foster global consistency in market practices and policies in the long run while recognizing the present regional and market maturity differences. The SIFMA US Covered Bonds Council will also coordinate its activities in the US with SIFMA's recent initiative in Europe in the form of a dealers-only body, the European Covered Bond Dealers Association.

"The Treasury Best Practices for Residential Covered Bonds published in July 2008 and the Final FDIC Covered Bond Statement were important and beneficial first steps towards establishing a regulatory and market practices regime for covered bonds in the U.S.," said George Miller, executive director of the American Securitization Forum.

"We expect to build upon the foundation created by those initiatives, along with industry efforts underway, in order to develop a liquid and efficient U.S. covered bonds market. These products offer benefits to originators, issuers, investors, consumers and the broader economy and we strongly support the development of this market in the U.S."