The Wall Street Journal is reporting that the Federal Reserve will allow big banks to use municipal bonds to meet its liquidity rules. The OCC and FDIC at this time do not plan on following Federal Reserve on this issue.
This change will apply to bank holding companies with $250 billion or more in total assets which are required to hold “high quality liquid assets” sufficient to fund operations for 30 days. Small banks ($50 to $250 billion) have a less stringent liquidity requirement of 21 days.
