FDIC issues liquidity guidance and encourages contingency funding

The US regulator has released recommendations on liquidity risk and encourages capital-raising initiatives as US banks feel the pinch

WASHINGTON, DC – US regulator the Federal Deposit Insurance Corporation (FDIC) has issued guidance on liquidity risk. The regulator says its recommendations are in response to the market turmoil, focusing on the risk of illiquidity within off-balance sheet exposures. Its capital adequacy recommendations cover capital-raising initiatives and contingency funding plans.

The regulator says: “Liquidity risk measurement and management systems should reflect an institution's complexity, risk profile and scope of operations. Institutions that use wholesale funding, securitisations, brokered deposits and other high-rate funding strategies should ensure their contingency funding plans address relevant stress events.”

The FDIC’s guidelines come as market commentators speculate on the possible failure of another large US bank, in the wake of the Bear Stearns buyout last March, and banks’ likely heavy risk exposures to ailing government-sponsored enterprises Fannie Mae and Freddie Mac – rumoured to be on the brink of further government intervention.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Modernising compliance functions with regtech

Regtech addresses the complexities of regulatory requirements, offering innovative tools to modernise compliance functions, streamline processes and enhance efficiency. This article explores its role in compliance and reporting within the banking sector,…

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here