Regulators set rules meant to ward off bank crisis
Federal regulators are requiring big banks to keep enough high-quality assets on hand to survive during a severe downturn, the latest move under congressional mandate to lessen the likelihood of another financial meltdown.
The Federal Reserve adopted rules on a 5-0 vote Wednesday that will subject big US banks for the first time to so-called liquidity requirements. Liquidity is the ability to access cash quickly.
Fed chief Janet Yellen called the rules ‘‘a very important regulation that will serve to strengthen the resilience of internationally active banking firms.’’
The 15 largest banks — those with more than $250 billion in assets — will have to hold enough cash, government bonds, and other high-quality assets to fund operations for 30 days during a time of market stress. Smaller banks — those with more than $50 billion and less than $250 billion in assets — will have to keep enough to cover 21 days. Banks with less than $50 billion in assets will not be subject to the requirements.
The liquidity rules for banks will begin to take effect in January, and the requirements will be phased in over two years.
Source: bostonglobe
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Minutes of the Federal Open Market Committee, March 17-18, 2015
