Senators Kay Hagan and Bob Corker yesterday (Wednesday) moved to attach the US Covered Bond Act as an amendment to wider economic legislation, the JOBS Act, being drawn up in the upper house of Congress.

Senator Kay Hagan

Hagan, a Democrat, and Corker, a Republican, introduced the United States Covered Bond Act of 2011 in November 2011, with the additional support of Democrat Chuck Schumer and Republican Mike Crapo. The amendment, S. 1835, can be found here.

They are now seeking to attach the bill to the “Jumpstart Our Business Startups Act” (JOBS Act), which is being drafted in the Senate. The House of Representatives passed the legislation with bipartisan support last Thursday (8 March).

The American Securitization Forum, SIFMA, TIAA-CREF and other industry bodies yesterday wrote to Senate Majority and Minority leaders urging them to support the move.

“While much of the focus of this legislative effort has been centred on promoting additional equity capital formation, we also believe the increased availability of cost-effective debt capital is critical for small businesses to be able to grow and create new jobs. Under S. 1835, small business loans are an asset class (along with residential mortgages, commercial real estate, auto loans and student loans) that is eligible to be used as collateral for a covered bond under the statutory framework. This will allow for additional liquidity and investment to be directed to help small businesses.”

The proposed legislation is very close to that pushed by Republican Congressman Scott Garrett and passed by the House Financial Services Committee in June 2011. That is yet to be voted on by the full House, and is with the Ways & Means Committee, which earlier this month extended the time available to itself to consider the covered bond bill (HR 940).

See here for The Covered Bond Report’s earlier discussion of the two bills:

https://news.coveredbondreport.com/2011/11/senate-bill-aligned-with-house-aimed-at-boosting-chances/