Representative Scott Garrett (R-NJ) and Representative Carolyn Maloney (D-NY) on March 8, 2011 introduced the United States Covered Bond Act of 2011 (“Act”), legislation targeted at establishing a regulatory framework to encourage the creation of a U.S. covered bond market. See our DechertOnPoint, Reform for the Covered Bond Industry on the Horizon. Covered bonds are similar to mortgage-backed securities; however, the loans underlying the securities remain on the balance sheet of the issuing bank, and the pool of loans is actively managed. The proposed legislation defines the issuers and asset classes that would be eligible to participate in covered bond programs, establishes a framework for a federal regulatory oversight program for covered bonds, and creates a default and insolvency resolution process in the event that an issuer fails.