Federal Register: Agencies Adopt Final Rule Allowing Banks to Treat Certain Munis as High-Quality Liquid Assets

The Federal Reserve Board, Office of the Comptroller of the Currency and FDIC (collectively, the "agencies") final rule to modify the agencies' liquidity coverage ratio ("LCR") rule was published in the Federal Register.

As previously covered, the final rule modifies the LCR rule to treat liquid and readily marketable, investment-grade municipal obligations as high-quality liquid assets. The rule expands the definition of "municipal obligations" to include the obligations of (i) a "state or any political subdivision thereof" or (ii) "any agency or instrumentality of a state or any political subdivision thereof."

The final rule will go into effect on July 5, 2019.