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Small-Bank Bill Said to Be Headed for Senate Vote; State Treasurers Cheer

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The Economic Growth, Regulatory Relief and Consumer Protection Act, S. 2155, will likely come up for a vote on the Senate floor “in the next few weeks,” according to Jared Roscoe, senior banking counsel for Sen. Mark Warner, D-Va.

“Seems like there’s a lot of desire on both sides of the aisle to take this up,” Roscoe told state treasurers Tuesday at the National Association of State Treasurers Legislative Conference in Washington. There’s “appetite to move this [bill] along,” he said.

Introduced last November by Senate Banking Committee Chairman Mike Crapo, R-Idaho, the bipartisan legislation, according to the committee, “right-sizes regulation for smaller financial institutions and includes important consumer protections for veterans, senior citizens and victims of fraud.”

Joe Torsella, Pennsylvania State Treasurer — who moderated the panel that included Roscoe — noted that a “key priority” for NAST is the designation of municipal bonds as high-quality liquid assets (HQLAs).

Roscoe noted one of the “key pieces” of S. 2155 is the HQLA provision allowing large banks to count some of their municipal bond investments, including tax-exempt housing bonds, as high-quality liquid assets under federal bank liquidity standards.

Roscoe noted that the bill now has 12 Democratic co-sponsors and more will be added “in the near future.”

What’s “key” is that HQLA assets “get special treatment for banks under the liquidity regimes that banking regulators have proposed,” he said.

Some on the House side “would like to add some things” to the legislation, added Joel Oswald, principal at Williams and Jensen, who also participate on the panel. The House and Senate may need to go to a conference committee to iron things out.

Section 403 of S. 2155 would require any municipal bond “that is both liquid and readily marketable and investment grade” to be treated as a level 2B high-quality liquid asset.

Qualifying them as “2A would have been more preferable for the banks and issuers,” said Oswald.

Christopher Lucas, director of global government affairs for BNY Mellon, who also participated on the panel, added that 2B “is a compromise,” noting that the 2B qualification is “an important first step to be able to say that municipal securities should be treated the same way as any other security. Maybe we’re not at the end of the process in that we didn’t get 2A, but it’s a really big first step and it’s a big win given where we were just two years ago.”

— Check out Mixed Bag for Bonds in 2018 on ThinkAdvisor.


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