House passes Messer-Maloney bill to encourage investment in local communities
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House passes Messer-Maloney bill to encourage investment in local communities

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WASHINGTON – February 2, 2016 – (RealEstateRama) — The House passed a bipartisan bill introduced by Congressman Luke Messer (IN-06) and Carolyn Maloney (NY-14) that encourages investment in local infrastructure projects by rolling back a burdensome federal banking restriction.

In the wake of the 2008 economic downturn, federal regulators adopted international banking standards that require banks to have enough High-Quality Liquid Assets (HQLAs) to cover their cash outflows for 30 days in case of a future financial meltdown. Unfortunately, under the new banking rules, municipal bonds are not considered liquid assets and therefore cannot be included under the Liquidity Coverage Ratio (LCR).

Most state and local governments rely on municipal bonds to finance infrastructure projects. But, this regulatory misstep has discouraged financial institutions from holding municipal debt. That means cash-strapped municipalities and school districts could be forced to reduce or even stop projects that are financed with municipal bonds.

The Messer-Maloney bill, H.R. 2209, fixes that by requiring federal banking regulators to include municipal bonds under the LCR.

“If our local leaders decide it’s important to build a new school, hospital, bridge or road for their residents, a federal regulatory misstep shouldn’t stand in their way,” said Congressman Messer. “This bill helps ensure cash-strapped school districts and municipalities will continue to have access to bonds to finance projects they think are best for their communities.”

Indiana State Treasurer Kelly Mitchell, who is a long-time supporter of H.R. 2209, said this about the bill’s passage: “H.R. 2209 allows banks to keep the costs of borrowing low to our communities which strengthens local governments’ ability to complete essential projects throughout our state. I would like to thank Congressman Messer for his dedication and leadership on this important issue.”

H.R. 2209 passed the House with unanimous bipartisan support.

“Democrats and Republicans understand that this bill is a big win for states and cities across the country and our economy,” said Congresswoman Maloney. “Without this fix, critical local infrastructure and other projects could lack the financing they need to go forward, costing us jobs and hurting local communities. The decision to exclude investment grade municipal bonds from the liquidity buffer was senseless, and municipalities across the country were being hurt as a result. The Federal Reserve has concluded a fix is necessary and there is strong bipartisan consensus in support of correcting this problem.”

Congressman Messer expects a companion bill to be introduced in the Senate this year.

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