Municipal bonds will be excluded from the group of easily sellable assets that banks can use to show they’re able to survive a credit crunch, Bloomberg reported today. Regulators, including the Federal Reserve, are set to approve a final liquidity rule on Sept. 3. The most recent draft bars debt issued by states and municipalities from being listed as high-quality assets that could help sustain a bank through a 30-day squeeze. Hoping to head off the kind of vulnerability seen during the 2008 credit crisis, the Fed, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. based their rule on an accord reached by the 27-nation Basel Committee on Banking Supervision. An initial version proposed last year, which called for a 2017 implementation, was toughest on banks with more than $250 billion in assets or major global reach.
