{"id":5657,"date":"2014-09-16T00:00:00","date_gmt":"2014-09-16T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2014\/09\/regulator_adjust_liquidity_rul"},"modified":"2022-05-06T11:00:20","modified_gmt":"2022-05-06T16:00:20","slug":"regulator-adjust-liquidity-rul","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/regulator-adjust-liquidity-rul\/","title":{"rendered":"Regulators Adjust Liquidity Rule for Big Banks"},"content":{"rendered":"\n

A new rule adopted by U.S. banks will require over thirty of the largest banks, including Citigroup (C) <\/a>and JPMorgan Chase (JPM)<\/a>, to add another $100 billion in cash or cash-like investments to what they currently hold to make sure that the firms don\u2019t run out of money in a crisis. Previous expectations were for the banks to raise around $200 billion to satisfy the rule\u2019s requirements. However, regulators have since reduced that number. <\/p>\n

The liquidity rule is supposed to protect the financial system and the economy during times of stress in the market so that the same issues that led to the failures of Bear Stearns and Lehman Brothers during the 2008 economic meltdown don\u2019t happen. The regulation mandates that firms have enough safe assets to cover 100% of their net cash outflows for 30 days when there is economic turmoil. With the final liquidity ratio banks, with assets between $50 billion and $250 billion will calculate their positions monthly instead of daily. They have until January 1, 2016 to comply with the rule.<\/p>\n

According to The Wall Street Journal<\/em>, The Clearing House, a trade group that represents banks, has expressed approval of the changes to the final rule. U.S. officials have said the liquidity coverage ratio creates a good balance between economic growth and financial stability. For now, municipal debt securities will not be considered safe, \u201chigh-quality liquid assets\u201d that can go toward a bank\u2019s compliance. Meantime, however, some people have expressed worry that when the markets and the economy are good the rule could impede banks from investing or lending.<\/p>\n

Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

A new rule adopted by U.S. banks will require over thirty of the largest banks, including Citigroup (C) and JPMorgan Chase (JPM), to add another $100 billion in cash or cash-like investments to what they currently hold to make sure that the firms don\u2019t run out of money in a crisis. Previous expectations were for […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3740],"tags":[],"class_list":["post-5657","post","type-post","status-publish","format-standard","hentry","category-miscellaneous"],"yoast_head":"\nRegulators Adjust Liquidity Rule for Big Banks — Investor Lawyers Blog — September 16, 2014<\/title>\n<meta name=\"description\" content=\"A new rule adopted by U.S. banks will require over thirty of the largest banks, including Citigroup (C) and JPMorgan Chase (JPM), to add another $100 — September 16, 2014\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/regulator-adjust-liquidity-rul\/\" \/>\n<meta name=\"twitter:card\" 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