Interim Final Rule Enables Banks to Hold Private-Activity Bonds as High-Quality Liquid Assets

Wednesday, August 22, 2018 - 2:30pm

Three federal banking agencies issued an interim rule today to amend the agencies’ liquidity rules concerning certain eligible municipal securities due to the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018. That legislation requires the Federal Reserve, the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency to treat a municipal obligation as a high-quality liquid asset under their liquidity coverage rules if the obligation is considered both “liquid and readily marketable” and “investment grade.” This change enables banks to hold private activity bonds as high-quality liquid assets. The interim rule will take effect upon publication in the Federal Register and comments will be accepted for 30 days after the publication in the Federal Register.