February 11, 2016
H.R. 2209 Passed by House of Representatives Today Classifies Investment Grade Municipal Securities as HQLAs
WASHINGTON, D.C. – The National Association of State Treasurers (NAST) commended the House of Representatives today after it passed legislation to protect the access of states and municipalities to low-cost financing for infrastructure projects across the country. H.R. 2209, introduced by Reps. Luke Messer (R-IN) and Carolyn Maloney (D-NY), will provide much-needed support for the municipal bond market by classifying investment grade municipal securities as High Quality Liquid Assets (HQLA).
“For nearly 200 years, state and local governments have relied on municipal bonds as an affordable, efficient source of funding for schools, highways and other critical infrastructure projects. With every corner of the nation in need of infrastructure investment, there couldn’t be a better time for the U.S. House of Representatives to have passed this legislation,” said NAST President and Washington State Treasurer James McIntire.
H.R. 2209 would amend the 2014 Liquidity Coverage Ratio: Liquidity Risk Measurement Standards, which set minimum liquidity requirements for large banking organizations, to include highly rated municipal securities that are both liquid and readily marketable as HQLAs. Including municipal securities in this classification will lower borrowing costs for state and local governments and further lower the cost of public infrastructure projects.
“NAST would like to thank the House leadership for supporting this measure, which will balance financial stability concerns while preserving state and local government’s ability to make crucial infrastructure investments across the country using low-cost municipal bonds,” added Treasurer McIntire. “We look forward to working with the U.S. Senate to pass a similar bill, and to build on this legislation to support a robust municipal bond market for years to come.”