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Sends letter in support of Senator Menendez bill to provide liquidity in municipal bond market, support local and state economies
WASHINGTON – The American Securities Association (ASA) today sent a letter to Senate Majority Leader McConnell and Minority Leader Schumer urging the inclusion of the Municipal Bond Emergency Relief Act in the soon to be considered COVID-19 stimulus package. The legislation, sponsored by Senator Menendez, would grant the Federal Reserve, in “unusual and exigent circumstances”, the ability to buy any bills, notes, revenue bonds, or warrants of any municipality within the states or U.S. territories.
“Senator Menendez’s bill is important to relieve the pressure America’s municipal bond market can experience during times of stress, like now,” said ASA CEO Chris Iacovella. “This bill will help to provide critical support to local and state economies across the country at a time when they need the markets to function smoothly. We urge strong bipartisan support and swift passage of the COVID-19 stimulus package.”
“The collective shock to markets of the COVID-19 outbreak, the rapid decline in oil prices, and diminishing investor confidence have created pressures and dislocations across virtually every asset class,” Iacovella wrote in the letter to Senate leadership. “Municipal bonds in particular have been affected, with benchmark 30-year yields increasing by a record amount, leading investors to pull over $12 billion out of municipal bond mutual funds over the last week.”
“Increasing yields and investor outflows place further financial strain on the budgets of state and local governments throughout the country and make it more difficult for municipalities to finance infrastructure, schools, hospitals, and other critical local projects,” Iacovella wrote.
“Congress should affirm the Federal Reserve’s historical duty as the “lender of last resort” in our economy, and give the Federal Reserve explicit authority to invoke it’s the powers necessary to mitigate the dislocations currently present in the municipal bond market.”
To read the full letter, click here.
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ASA’s regional financial services companies work in communities across the country to create jobs, grow the economy, and increase prosperity for all Americans. The ASA exclusively represents the capital market and private client interests of its members and seeks to promote free market principles making it easier to access financial advice and capital. ASA members help Americans save for retirement, provide Main Street businesses with capital to grow, and advise hardworking Americans how to create and preserve wealth. For the latest updates follow @AmerSecurities and learn more at http://americansecurities.org/.
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