Main Street and Wall Street are fighting the U.S. Federal Reserve over municipal bonds — and they’re gaining ground.
Local-government officials and securities-industry lobbyists turned to Congress after regulators including the Fed adopted rules that would restrict or bar banks from including munis among the assets they need to hold to weather a financial shock. The effort has borne rare fruit: Overwhelming bipartisan support in Congress, where a bill forcing regulators to classify munis as liquid assets passed a key House committee by 56-1 last month. Analysts say it may win final approval next year.
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