Sens. Mike Rounds (R-S.D.) and Mark Warner (D-Va.) today reintroduced a bipartisan bill that would expand banks’ ability to count municipal securities as high-quality liquid assets under the Liquidity Coverage Ratio. A similar bill backed by the American Bankers Association passed the House in the last Congress.
While the Federal Reserve last spring issued a rule allowing certain municipal securities to be counted as HQLA — a step ABA has long advocated — the Senate bill would apply to all banking agencies. Due to the role banks play as investors in municipal markets, expansion of the HQLA definition is expected to be beneficial for all banks — not just those covered by the LCR.