financetom
Economy
financetom
/
Economy
/
Fed's Barr says regulators considering 'adjustments' to liquidity rules
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Fed's Barr says regulators considering 'adjustments' to liquidity rules
May 20, 2024 6:27 AM

WASHINGTON (Reuters) - U.S. bank regulators are reconsidering how much liquidity banks should be required to have on hand following a series of abrupt bank failures in 2023, the Federal Reserve's top regulatory official said Monday.

Michael Barr, the Fed's vice chair for supervision, said regulators are considering "targeted adjustments" to existing liquidity rules aimed at boosting bank resilience under stress. The changes under consideration are aimed at larger banks, and would be intended to ensure they can readily access funds to offset surprise losses or deposit flight, he said. Barr did not say when he expected regulators to propose such changes.

Among the changes under consideration are requiring larger banks to position a minimum level of collateral at the Fed's discount window, which is intended to serve as a lender of last resort, but one banks have resisted in the past due to concerns it could signal weakness to the financial market.

Barr also said larger banks could be directed to ensure they have sufficient liquidity to cover their uninsured deposits, after Silicon Valley Bank saw those funds, which made up the vast majority of their deposits, flee quickly in the days before its failure.

Another lesson from SVB's failure is regulators are considering different treatment for certain types of deposits that may be more prone to runs, such as those associated with venture capital and cryptocurrency businesses.

"As we saw during the stress of a year ago, these types of deposits can flee banks much more quickly than previously anticipated," he said in prepared remarks.

Lastly, regulators are also considering placing restrictions on how much larger banks can rely on "held-to-maturity" assets when calculating their liquidity under existing rules. Barr noted that those securities can prove difficult to sell during times of stress, potentially reducing their usefulness as a liquidity reserve.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
US launches employment discrimination probe into Virginia's George Mason University
US launches employment discrimination probe into Virginia's George Mason University
Jul 17, 2025
WASHINGTON (Reuters) -The U.S. Justice Department on Thursday said it had launched an employment discrimination probe into George Mason University in Virginia, making it the latest college to be targeted by the Trump administration. The civil rights probe will examine whether George Mason, a state university, is engaged in discriminatory practices based on race and sex, the department said. It...
Ex-Fed Governor Warsh says new accord between Treasury, central bank needed
Ex-Fed Governor Warsh says new accord between Treasury, central bank needed
Jul 17, 2025
(Reuters) -Former Federal Reserve Governor Kevin Warsh, seen as a potential successor to Fed Chair Jerome Powell, said on Thursday there needs to be a new accord between the Treasury Department and U.S. central bank, referencing a 1951 pact that separated federal debt management from monetary policy. Warsh, now a fellow at Stanford University's Hoover Institution, said on CNBC that...
Daily Roundup of Key US Economic Data for July 17
Daily Roundup of Key US Economic Data for July 17
Jul 17, 2025
02:38 PM EDT, 07/17/2025 (MT Newswires) -- Retail sales rose by 0.6% in June and were up 0.5% excluding a 1.2% gain in auto sales, above estimates for both metrics. A 0.9% gain in clothing sales, a 0.6% increase in food services and drinking places sales and a 0.9% gain in building materials sales were the key factors, while gasoline...
Fed's Daly says 'reasonable' to expect two rate cuts before end of 2025
Fed's Daly says 'reasonable' to expect two rate cuts before end of 2025
Jul 17, 2025
(Reuters) -San Francisco Federal Reserve President Mary Daly reiterated on Thursday it is reasonable to expect two interest rate cuts before the end of this year, particularly with the impact of President Donald Trump's tariffs looking more muted than originally expected. Inflation is still above the U.S. central bank's 2% target and there's still some work to do to bring...
Copyright 2023-2026 - www.financetom.com All Rights Reserved