Aug 25 Municipal bonds will no longer be part of
the easily sellable assets that banks can use to show they are
able to survive a credit crunch, Bloomberg reported, citing a
person familiar with the matter.
The final liquidity rule will be approved by regulators,
including the Federal Reserve, on Sept 3, the news service
reported the person as saying.
The most recent draft does not list debt issued by states
and municipalities as high-quality assets that could help
sustain a bank through a 30-day squeeze, the report said, citing
The Public Affairs Office of the Federal Reserve could not
be reached out for comment outside of regular U.S. business
The regulations could affect the municipal bond market by
giving banks less incentive to buy bonds that finance schools,
roads and public works, Bloomberg said.
(Reporting by Anjali Rao Koppala in Bangalore; Editing by Ken