Dealer Bank

DEFINITION of 'Dealer Bank'

A commercial bank authorized to buy and sell government debt securities including federal and municipal bonds. This debt is usually issued to fund large government projects such as road and bridge construction. Dealer banks are registered with the Municipal Securities Rulemaking Board.

BREAKING DOWN 'Dealer Bank'

Income from municipal bonds is usually exempt from federal income taxes in addition to being virtually risk-free with a near zero default rate.