US banks are told to be prepared for 30-day crisis
JESSE HAMILTON AND JIM BRUNSDEN
25 OCTOBER 2013
The biggest US banks would be required to hold enough easily sold assets to survive a 30-day credit drought under proposed new Federal Reserve liquidity rules.
The Federal Reserve liquidity coverage ratio proposal, approved unanimously at a meeting in Washington, goes further than the Basel III measure adopted in January and calls for earlier implementation than the EU.
The US plan, most stringent for the biggest banks, is looking at implementation by 2017 – two years ahead of Basel’s deadline. “The proposed rule would, for the first time in the United States, put in place a quantitative liquidity requirement that would foster a more resilient and safer financial system,” Fed chairman Ben Bernanke said before the vote.
The proposal would require setting aside about $2 trillion (€1.44tn), and the Fed estimates that US banks are currently $200bn (€144bn) short.