Rep. Garrett on Measures of Success for Covered Bonds Hearing

Asked in a teleconference Monday (Dec. 14) about his measures of success for the hearing on covered bonds set for Tuesday by the House Committee on Financial Services (HCFS), U.S. Congressman Scott Garrett identified at least three:

• Rep. Scott GarrettGetting the hearing scheduled. As described by Rep. Garrett, obtaining the hearing date is a success in itself. His efforts in that regard have been going on behind the scenes for months. He had first hoped for a hearing before Congress' August recess. Then he looked to September. Only now, after the HCFS passed the big market reform bill out of committee, did a hearing become possible.

• Getting other HCFS members on board. Committee Chairman Barney Frank (D-MA) recently went on record calling covered bonds "a very good idea," and Rep. Paul E. Kanjorski (D-PA) cosponsored a covered bonds bill with Rep. Garrett earlier this term. According to Rep. Garrett, ranking Republican committee member Spencer Bachus (R-AL) also favors the concept. But beyond those representatives, Rep. Garrett hopes the hearing will provide more information "to the rest of the members of the committee who are either there or watching" via webcast.

• Gaining momentum for further action. Most crucially, Rep. Garrett hopes the hearing on covered bonds will spur "interest by the Chairman to move forward with the legislation." Tuesday's hearing focuses on the general topic of prospects for a U.S. covered bond market rather than on specific legislation. As Rep. Garrett pointed out, "an actual hearing on a piece of legislation" will be required before a covered bonds bill could come out of committee for consideration by the full House of Representatives.

Asked to estimate a percentage likelihood that the House may pass covered bond legislation during this session of Congress, Rep. Garrett replied: "I can't put a number on it, but I would say a high percentage probability."  He emphasized that the idea has bipartisan support and that HCFS now has time on the docket to deal with the issue.

"[T]hose two facts alone should be a good sign that we can move this thing," Rep. Garrett said.

With regard to the Senate, Rep. Garrett is more uncertain, "because they operate on a totally different timeframe than we do."  But he anticipates bipartisan support in that chamber as well.