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.

Bill: 114-s-3404
Sponsor: full_name: Sen. Rounds, Mike [R-SD]
Introduced: 2016-09-27
Policy area: Finance and Financial Sector
Subjects: Administrative law and regulatory procedures

Bank accounts, deposits, capital

Banking and financial institutions regulation

Department of the Treasury

Federal Deposit Insurance Corporation (FDIC)

Federal Reserve System

Financial services and investments

Securities

State and local finance
Latest action: action_date: 2016-09-27
text: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

Summaries:
action_date: 2016-09-27
action_desc: Introduced in Senate
text: <p>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).</p>

tv_txt: II 114th CONGRESS 2d Session S. 3404 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. 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.