Covered bonds are a popular financing tool for many non-U.S. banks and the covered bond market has been active recently. The first covered bond was issued in Germany in 1770. Even though there is no covered bond legislation in the United States, covered bond offerings by non-U.S. banks are popular with U.S. investors. It may be time for the U.S. Congress to revisit adopting covered bond legislation in the United States since covered bonds would be a nice additional financing source for U.S. banks particularly smaller or regional banks that do not have the same access to the securitization market that the larger U.S. banks have.

According to the European Covered Bond Council's European Covered Bond Fact Book for 2021, there are active covered bond markets in 30 different European countries and several countries outside of Europe have covered bond legislation including Australia, Canada, New Zealand, Singapore, South Korea and Brazil.

The covered bond laws in Canada, Europe and the other jurisdictions with covered bond legislation protect investors in the event of a receivership or insolvency of the issuing bank. These laws generally provide that the pool of residential mortgage loans backing the covered bonds or the "cover pool" will not be available to other creditors of the issuing bank in the event of the receivership or insolvency of the issuing bank. There have been attempts in the past to adopt similar legislation in the United States, particularly after the 2008 credit crisis, but those efforts have not been successful to date.