Though some view covered bonds as a valid alternative to securitization, an effort by Rep. Scott Garrett, R-N.J., to include a statutory framework for such bonds in the Dodd-Frank Act failed during the last hours of negotiations on the legislation. "Why would you not put it on the table?" said Sean Davy, a managing director at SIFMA. "And especially why would you not put it on the table for people to use when there's so much question about the other tools and how they're going to exist in the future? Don't you want to put more tools on the table when you think some of the existing tools are broken?" Part of the challenge has been resistance from the Federal Deposit Insurance Corp., as well as a lack of demand for covered bonds as government-sponsored enterprises continue to buy securities.
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