The Association of German Pfandbrief Banks, which is named after the longest-standing covered bond product in the world, has some advice for would-be U.S. issuers as they consider establishing a legal framework for a covered bond market here.

For example, Jens Tolckmitt, the association's executive director, suggests keeping the range of assets that may be refinanced under a covered bond simple. He said he feels one reason Germany's covered bonds proved to be such reliable performers and suffered relatively little damage in the recent global crisis was "the safety of the underlying asset."

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