09/03/2014 - FINANCIAL REPRESSION IN ACTION “SAFEGUARDS” BLATENTLY CORRUPTED
The Federal Reserve, under pressure from lawmakers and state officials, is considering allowing banks to use certain types of municipal debt to satisfy a new postcrisis financing rule.
U.S. regulators are expected to finalize safeguards requiring that banks hold enough liquid assets—such as cash or those easily convertible to cash—to fund their operations for 30 days if other sources of funding aren’t available. Municipal securities issued by states and localities wouldn’t count as “high-quality liquid assets” under the rule, meaning such securities wouldn’t qualify for use under the new funding requirements.
States and localities have warned that excluding their securities could cause banks to retreat from a $3.7 trillion market in which they have increasingly become an important player, which could driving up borrowing costs to finance roads, schools and bridges. Banks have nearly doubled their ownership in municipal securities over the past decade to more than 11%, according to Fed data.
HOW DOES THIS PROTECT THE PUBLIC
WHEN MUNICIPAL DEBT IS THE PROBLEM?
MUNICIPAL DEBT IS THE PROBLEM!
