Fed Liquidity Rule Falls Short As Crisis Management Guide

Law360, New York (October 24, 2013, 8:05 PM EDT) -- The Federal Reserve's Thursday proposal requiring banks to hold enough liquid assets to survive a financial shock does not give clear guidance regarding how financial institutions should deploy those assets in a crisis, which could create more confusion if the rule becomes final, attorneys say.

In its key proposal for requiring that banks maintain a base of assets they can quickly convert into cash when a crisis hits, the Fed included some flexibility by allowing banks a three-day grace period for falling below those requirements, either...
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