II 

114TH CONGRESS 

2D SESSION S. 3404 

To amend the Federal Deposit Insurance Act to require the appropriate 

Federal banking agencies to treat certain municipal obligations as level 

2B liquid assets, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 27, 2016 

Mr. ROUNDS (for himself, Mr. WARNER, Mr. SCHUMER, Mr. TESTER, Mr. 

KIRK, Ms. HEITKAMP, Mr. SCOTT, Mr. MORAN, Mr. VITTER, and Mr. 

DONNELLY) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Federal Deposit Insurance Act to require 

the appropriate Federal banking agencies to treat certain 

municipal obligations as level 2B liquid assets, and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. TREATMENT OF CERTAIN MUNICIPAL OBLIGA4 TIONS. 

5 (a) IN GENERAL.—Section 18 of the Federal Deposit 

6 Insurance Act (12 U.S.C. 1828) is amended— 


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•S 3404 IS

1 (1) by moving subsection (z) so that it appears 

2 after subsection (y); and 

3 (2) by adding at the end the following: 

4 ‘‘(aa) TREATMENT OF CERTAIN MUNICIPAL OBLIGA5 TIONS.— 

6 ‘‘(1) DEFINITIONS.—In this subsection— 

7 ‘‘(A) the term ‘investment grade’, with re8 spect to an obligation, has the meaning given 

9 the term in section 1.2 of title 12, Code of Fed10 eral Regulations, or any successor thereto; 

11 ‘‘(B) the term ‘liquid and readily-market12 able’ has the meaning given the term in section 

13 249.3 of title 12, Code of Federal Regulations, 

14 or any successor thereto; and 

15 ‘‘(C) the term ‘municipal obligation’ means 

16 an obligation of— 

17 ‘‘(i) a State or any political subdivi18 sion thereof; or 

19 ‘‘(ii) any agency or instrumentality of 

20 a State or any political subdivision thereof. 

21 ‘‘(2) MUNICIPAL OBLIGATIONS.—For purposes 

22 of the final rule entitled ‘Liquidity Coverage Ratio: 

23 Liquidity Risk Measurement Standards’ (79 Fed. 

24 Reg. 61439 (October 10, 2014)), the final rule enti25 tled ‘Liquidity Coverage Ratio: Treatment of U.S. 


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•S 3404 IS

1 Municipal Securities as High-Quality Liquid Assets’ 

2 (81 Fed. Reg. 21223 (April 11, 2016)), and any 

3 other regulation that incorporates a definition of the 

4 term ‘high-quality liquid asset’ or another substan5 tially similar term, the appropriate Federal banking 

6 agencies shall treat a municipal obligation as a high7 quality liquid asset that is a level 2B liquid asset if 

8 that obligation is, as of the date of calculation— 

9 ‘‘(A) liquid and readily-marketable; and 

10 ‘‘(B) investment grade.’’. 

11 (b) AMENDMENT TO LIQUIDITY COVERAGE RATIO

12 REGULATIONS.—Not later than 90 days after the date of 

13 enactment of this Act, the Federal Deposit Insurance Cor14 poration, the Board of Governors of the Federal Reserve 

15 System, and the Comptroller of the Currency shall amend 

16 the final rule entitled ‘‘Liquidity Coverage Ratio: Liquidity 

17 Risk Measurement Standards’’ (79 Fed. Reg. 61439 (Oc18 tober 10, 2014)) and the final rule entitled ‘‘Liquidity 

19 Coverage Ratio: Treatment of U.S. Municipal Securities 

20 as High-Quality Liquid Assets’’ (81 Fed. Reg. 21223 

21 (April 11, 2016)) to implement the amendments made by 

22 this Act. 

Æ 


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