The Federal Reserve on Friday released final rule changes to treat more municipal securities as high-quality liquid assets (HQLA) under liquidity requirements for large financial institutions, but critics complain they do not go far enough and could hurt the muni market, Bond Buyer reported on Friday. The rule changes will take effect on July 1, 2016, but other banking regulators still exclude munis as HQLA. "Unfortunately, [the rule changes] will continue to discourage investment in our local communities. And, it will do little, if anything, to help cash-strapped school districts and municipalities finance critical infrastructure projects," said Rep. Luke Messer (R-Ind.), sponsor of a bill approved by the House in November that would go further than the Fed. The final rule changes are slightly more lenient than those proposed last May after municipal market participants protested the liquidity rules adopted by the Fed, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. in September 2014 that excluded munis as HQLA because of concerns they were not liquid or readily marketable and could not be converted to cash during periods of financial stress.
