Following requests from many banks and municipal-finance officers, the FRB – but not the OCC or FDIC – has decided that general obligation securities (GOs) of a public-sector entity that meet tough criteria are eligible as Level 2B assets for purposes of the liquidity coverage ratio. However, the eligibility conditions in the final rule track most of the initial proposal,and are so stringent as to result in flexibility being restricted not only to FRB-regulated companies, but also to a limited class of GOs as the authority will be difficult to utilize in practice.
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