OCC BULLETIN 2018-32
Subject: Liquidity Coverage Ratio Rule: Treatment of Certain Municipal Obligations as High-Quality Liquid Assets
Date: September 26, 2018
To: Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies of Foreign Banks; Department and Division Heads; All Examining Personnel; and Other Interested Parties
Description: Interim Final Rule
The Office of the Comptroller of the Currency (OCC) published an interim final rule in the Federal Register on August 31, 2018, that amends the OCC’s liquidity coverage ratio (LCR) rule to treat liquid and readily-marketable, investment grade municipal obligations as high-quality liquid assets (HQLA). The interim final rule was issued jointly with the Board of Governors of the Federal Reserve System (Board) and the Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies).
The effective date of the interim final rule is August 31, 2018.
Section 403 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), enacted on May 24, 2018, requires the agencies, for purposes of the LCR rule and any other regulation that incorporates a definition of the term “high-quality liquid asset” or another substantially similar term, to treat a municipal obligation as HQLA that is a level 2B liquid asset if that obligation is, as of a bank’s LCR calculation date, liquid and readily-marketable and investment grade.
This interim final rule amends the agencies’ LCR rule to implement section 403 of the EGRRCPA.
Please contact Christopher McBride, Director, James Weinberger, Technical Expert, or Ang Middleton, Bank Examiner (Risk Specialist), Treasury and Market Risk Policy, (202) 649-6360; David Stankiewicz, Special Counsel, (202) 649-5510, Henry Barkhausen, Counsel, (202) 649-5490, or Daniel Perez, Attorney, (202) 649-5490, Chief Counsel’s Office.