US banks still fret about cutting liquidity buffers

Fed instructions to banks to run down LCR undermined by governance rules, other liquidity metrics

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With corporate clients drawing heavily on credit lines amid the lockdown to combat the coronavirus, US banks are seeking clearer guidance from prudential supervisors on how far they can eat into the buffers on their liquidity coverage ratio (LCR).

The US Federal Reserve issued guidance on March 15, and a follow-up Q&A, together with a supervisory and regulatory (SR) letter four days later, encouraging banks to make “safe and sound” use of their liquidity buffers to maintain lending to

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