WASHINGTON Aug 26 U.S. banks will not be able
to include municipal bonds in mandatory buffers of easy-to-sell
assets under rules nearing final approval, a person familiar
with the process said on Tuesday.
The U.S. Federal Reserve weighed whether certain individual
cities' and states' debt should count, but did not include them
in the final rules, set to be approved on Sept. 3 as part of a
global agreement to make banks safer, the person said.
Under the rules, first proposed in October 2013, banks must
hold enough assets that can be sold quickly so they can cope
with customer withdrawals and post any required collateral in
the event of a repeat of the 2007-2009 financial crisis.
The proposed rules, which were seen as tougher than the
global accord known as Basel III, counted U.S. government debt
and reserves held at the Fed toward the liquid asset buffer, but
not municipal bonds.
That prompted pushback from city and state officials, who
said it could raise their borrowing costs.
But the final version also will not consider municipal debt
as easily sellable, according to the person familiar with the
Regulators have not publicly announced plans to meet next
week. The Wall Street Journal first reported on Friday that
municipal debt would be excluded under the final rules.
(Reporting by Emily Stephenson; Editing by Karey Van Hall and