Title: 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.
Policy area: Finance and Financial Sector

Summary:
This bill amends the Federal Deposit Insurance Act to require certain municipal obligations to be treated as level 2B liquid assets if they are investment grade, liquid, and readily marketable. Under current law, corporate debt securities and publicly traded common-equity shares, but not municipal obligations, may be treated as level 2B liquid assets (which are considered to be high-quality assets).

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 828 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                 S. 828

 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

                April 5 (legislative day, April 4), 2017

    Mr. Rounds (for himself, Mr. Warner, Mr. Tester, Mr. Scott, Mr. 
  Donnelly, Ms. Heitkamp, Mr. Cotton, Mr. Tillis, Mr. Van Hollen, Mr. 
Kennedy, and Mr. Schumer) 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.

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

SECTION 1. TREATMENT OF CERTAIN MUNICIPAL OBLIGATIONS.

    (a) In General.--Section 18 of the Federal Deposit Insurance Act 
(12 U.S.C. 1828) is amended--
            (1) by moving subsection (z) so that it appears after 
        subsection (y); and
            (2) by adding at the end the following:
    ``(aa) Treatment of Certain Municipal Obligations.--
            ``(1) Definitions.--In this subsection--
                    ``(A) the term `investment grade', with respect to 
                an obligation, has the meaning given the term in 
                section 1.2 of title 12, Code of Federal Regulations, 
                or any successor thereto;
                    ``(B) the term `liquid and readily-marketable' has 
                the meaning given the term in section 249.3 of title 
                12, Code of Federal Regulations, or any successor 
                thereto; and
                    ``(C) the term `municipal obligation' means an 
                obligation of--
                            ``(i) a State or any political subdivision 
                        thereof; or
                            ``(ii) any agency or instrumentality of a 
                        State or any political subdivision thereof.
            ``(2) Municipal obligations.--For purposes of the final 
        rule entitled `Liquidity Coverage Ratio: Liquidity Risk 
        Measurement Standards' (79 Fed. Reg. 61439 (October 10, 2014)), 
        the final rule entitled `Liquidity Coverage Ratio: Treatment of 
        U.S. Municipal Securities as High-Quality Liquid Assets' (81 
        Fed. Reg. 21223 (April 11, 2016)), and any other regulation 
        that incorporates a definition of the term `high-quality liquid 
        asset' or another substantially similar term, the appropriate 
        Federal banking agencies shall treat a municipal obligation as 
        a high-quality liquid asset that is a level 2B liquid asset if 
        that obligation is, as of the date of calculation--
                    ``(A) liquid and readily-marketable; and
                    ``(B) investment grade.''.
    (b) Amendment to Liquidity Coverage Ratio Regulations.--Not later 
than 90 days after the date of enactment of this Act, the Federal 
Deposit Insurance Corporation, the Board of Governors of the Federal 
Reserve System, and the Comptroller of the Currency shall amend the 
final rule entitled ``Liquidity Coverage Ratio: Liquidity Risk 
Measurement Standards'' (79 Fed. Reg. 61439 (October 10, 2014)) and the 
final rule entitled ``Liquidity Coverage Ratio: Treatment of U.S. 
Municipal Securities as High-Quality Liquid Assets'' (81 Fed. Reg. 
21223 (April 11, 2016)) to implement the amendments made by this Act.
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