Federal Reserve finalizes rule adding certain investment grade general obligation state and local municipal bonds to types of assets big banks may hold to meet liquidity needs during time of financial stress

[kreslik.news]

The Federal Reserve Board on Friday finalized a rule to include certain U.S. general obligation state and municipal securities in the range of assets large banking organizations may use to satisfy regulatory requirements designed to ensure that these banking organizations have the capacity to meet their liquidity needs during a period of financial stress.

The recent financial crisis highlighted the need for enhanced liquidity risk-management at the largest financial institutions, including having sufficient liquidity reserves to mitigate the risk of creditor and counterparty runs. The liquidity coverage ratio (LCR) requirement adopted by the federal banking agencies in September 2014 requires ... (read more)