Banks would be able to count municipal securities as high-quality liquid assets under the Liquidity Coverage Ratio due to a recently introduced bill. Sens. Mike Rounds (R-S.D.), Chuck Schumer (D-N.Y.) and Mark Warner (D-Va.) have authored the bill which is similar to one that passed through House earlier this year. Under proposed rules issued by federal banking regulators, debt sold by states and localities isn’t eligible to count as High Quality Liquid Assets (HQLA), which means they won’t qualify as assets necessary for banks to retain under new funding requirements issued following the financial crisis. These requirements ensure that banks maintain a liquidity coverage ratio that includes holding a certain amount of HQLA, but prohibits munis from being considered as HQLA. The proposed legislation would categorize certain types of municipal debt as Level 2B, on par with certain corporate debt, and would receive a 50% equivalent to the liquidity ratio requirement.