Mr Cooper Group Inc (COOP)

[Petewamu]

https://www.mayerbrown.com/-/media/files/perspectives-events/events/2020/10/covered-bonds-updatepresentation.pdf

WaMu and BofA
• There has been some issuance by U.S. banks
• Washington Mutual issued its first series of covered bonds in Europe in 2006
• Bank of America followed with a covered bond issuance in 2007
• Both programs were curtailed by the financial crisis, in WaMu’s case by insolvency.
• In the absence of a statute, the structure used to emulate a statutory covered bond
was expensive at the time and even more expensive today
• It is unlikely that a U.S. bank would use this structure todayWashington Mutual provides an example of the benefits of covered bonds
• FDIC transferred the covered bonds and the collateral pool to JPMorgan
• JPMorgan assumed the obligation on the outstanding covered bonds
• The rating on the bonds instantly went up
• Washington Mutual senior bondholders received pennies on the dollar


U.S. Bank Issuance
• Favorable outcome for WaMu CB holders
• WaMu structure is too expensive and complicated post crisis
• Perhaps the Canadian structure, but true sale questions could exist
• Probably legislation is necessary
• GSE reform first
• Dodd-Frank limits on bank investments and activities; no cash shortfalls at banks
• Little RMBS activity; but it is finally starting to grow