“States and localities are on the front lines of investing in our communities, growing jobs, and strengthening infrastructure. We need to make sure they have the same access to capital as corporations, so they are able to fund critical projects and make necessary improvements,” said
In addition to
Under proposed rules issued by federal banking regulators, debt sold by states and localities isn’t eligible to count as High Quality Liquid Assets (HQLA), which means they won’t qualify as assets necessary for banks to retain under new funding requirements issued following the financial crisis. These requirements ensure that banks maintain a liquidity coverage ratio that includes holding a certain amount of HQLA, but prohibits munis from being considered as HQLA. The rules effectively cabin off an entire category of high quality and highly liquid debt from being considered as HQLA, limiting the incentive for financial institutions to hold these assets and potentially adversely affecting the issuance of such debt by states and municipalities.
The bill text is available here https://www.scribd.com/document/344154197/Muni-Bond-Legislation-04-05-2017.
Read this original document at: https://www.vanhollen.senate.gov/content/van-hollen-introduces-bipartisan-legislation-provide-financial-stability-muni-bonds