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Fed Proposes Liquidity Disclosures, Will Improve Examinations

Joe Mont | November 25, 2015

A flurry of pre-holiday activity by the Federal Reserve’s Board of governors brings both good and bad news for large banks.

The worrisome word from Fed Governor Daniel Tarullo on Monday was that banks can expect their annual stress tests to be more stringent, with the potential for an increase to minimum capital requirements. “There is a pretty good chance” he told Bloomberg TV.

Those remarks were followed on Tuesday by the release of a proposed rule that would require large banks to publicly disclose several measures of their liquidity profile. Under the Liquidity Coverage Ratio (LCR) rule adopted by regulators in September 2014, banks with consolidated assets of $50 billion or more and certain depository institution subsidiaries are required to hold a minimum amount of high-quality liquid assets (HQLA) that can be easily and quickly converted into cash. The amount of HQLA held by...

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