New efforts from the Hill and industry players to get the U.S. covered bonds off the ground may be the key to restarting the mortgage finance market. New Jersey Congressman Scott Garrett (R-NJ) introduced a proposal for legislation last month, titled Equal Treatment for Covered Bonds Act, that would establish a comprehensive statutory framework governing covered bonds in the U.S. Unlike Europe, the U.S. has no specific federal law legislating covered bonds, which some market players say has hindered their development in this country. Garrett's proposed amendment to the Financial Stability Act would fill this breach. A covered bond trader who spoke to HousingWire, clarified that now that the bill has bipartisan support (Rep. Paul E. Kanjorski, D-PA, recently co-sponsored) the structure finance industry would see the legislations passage as a stamp of government support. If enacted, the legislation would designate the Secretary of the Treasury as the "covered bond regulator" and require ongoing oversight. It would set detailed requirements governing the type and quality of assets allowed in the cover pools. The new legislation would also provide for covered bonds that could offer funding for several asset classes that are not presently included in European statutory frameworks. ... Tim Skeet, head of covered bonds for Bank of America/Merrill Lynch, based in London and a member of the U.S. Covered Bonds Council -- the Securities Industry and Financial Markets Association (SIFMA) and the American Securitization Forum (ASF) formed the Council in 2008 -- said that a Congressional bill on covered bonds is slated to be introduced sometime in January 2010. “The real problem over the past year with this bill has been how to find the right people to put it into the agenda when there was so much else to worry about,” according to Skeet. He also said that the fact that the covered bonds proposal is being revisited means that the government is looking at the crisis as entering the recovery phase. “It tells us a lot about where they think we are at, and its says that the politicians and the regulators may think we are coming through it," he said. "The question they are considering is what to do now to bring mortgages back and bring back liquidity, and you don’t get a sense that they are looking at securitization coming back anytime soon. This is an alternative.” TO READ THE FULL STORY, SUBSCRIBE NOW.