U.S. Regulators to Propose New Liquidity Demand for Big Banks

  • Rule would require lenders have long-term sources of funding
  • Net Stable Funding Ratio is second part of liquidity controls

U.S. bank regulators are set to propose the second of two major demands on the amount of liquidity lenders need to have on hand to keep running through tough times.

The so-called net stable funding ratio, which would require banks to back away from reliance on volatile shorter-term funding, will be considered by the Federal Deposit Insurance Corp. at a meeting on April 26, the agency said Friday. The measure stems from an international accord and is intended to help prevent a repeat of the liquidity crunch seen during the 2008 financial crisis.

The new requirement is meant to compliment an earlier demand for lenders to maintain a 30-day stockpile of easy-to-sell assets to weather short-term stress. Three U.S. agencies are required to adopt the version of the rule approved by the Basel Committee on Banking Supervision in 2014.

Next week’s vote was a last-minute addition to an FDIC meeting agenda that otherwise is set to sign off on an incentive-compensation rule proposal made public this week. The Office of the Comptroller of the Currency expects to take up the liquidity proposal at the same time as the FDIC, said Bryan Hubbard, an OCC spokesman. Eric Kollig, a spokesman for the Federal Reserve, declined to comment on the agency’s plans.

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