Although covered bond legislation got the boot from the reconciled financial reform bill agreed to by a Congressional committee and awaiting passage into law, the original bill's advocates are hoping for a revival soon. A conference of House Representatives and Senators agreed early Friday on a sweeping financial regulatory reform bill after weeks of reconciliation between separate House and Senate versions. Committee members ultimately rejected covered bond legislation offered by the House and modeled after the proposed bill by Rep Scott Garrett (R-NJ). "We don't view this as a set back in the least," Erica Elliott, a spokesperson for Garrett's office, tells HousingWire. "We were very excited for the opportunity to bring covered bonds up for discussion during the financial regulatory reform conference, and we remain optimistic that all parties involved will work together in a productive and expedient manner to pass legislation establishing a robust covered bonds market in the United States." Garrett's United States Covered Bond Act, introduced in March, aims to establish a regulatory framework for covered bonds in the US. It lists eligible assets for covered bonds as residential property, home equity assets, as well as auto, commercial and student loans. Covered bonds are so named for the dual recourse provided, where the issuer is on the hook to pay out regardless of whether or not the collateral performs as expected. Language that would have established a statutory framework for covered bonds failed -- by a close vote -- to gain inclusion in the final reform bill. A client alert from law firm Morrison & Foerster indicated a single vote rejected the covered bond legislation, according to the Covered Bond Investor. As HousingWire reported, the reconciled bill establishes the Consumer Finance Protection Bureau, ends taxpayer-funded bailouts, brings greater regulation to the derivatives market, sets ups credit risk retention exemptions for government-insured mortgages and includes a "watered-down" version of the Volcker Rule on proprietary trading. "Because of the crush of the Volker rule, the derivative pushout rule, the 'too big to fail' resolution authority, and the other provisions of the reform bill, the covered bond language did not get the time and attention needed to get everybody's concerns on the table," Morrison & Foerster senior counsel Jerry Marlatt told Covered Bond Investor. The final bill as a whole is receiving a warm welcome from regulators, with Securities and Exchange Commission (SEC) chairman Mary Schapiro among those responding to the committee's decision. "The bill that emerged from the conference to be considered this week will improve oversight of large interconnected institutions, fill significant regulatory gaps, provide greater oversight and transparency over hedge funds and over-the-counter derivatives, improve the SEC's funding process and provide additional investor protections," Schapiro said in a statement. Write to Diana Golobay.