Federal banking firms today launched upgraded assistance on liquidity threats and contingency preparation, stating that the bank failures of the very first half of the year highlight the significance of both. In the upgrade, the FDIC, Federal Reserve, OCC and National Credit Union Administration kept in mind that the extraordinary level and speed of deposit outflows “at a few firms” caused their collapse. “These events are a reminder to depository institutions that depositor behavior and broader market conditions may evolve over time, and sometimes without warning,” the firms stated.
The upgraded assistance motivates depository organizations to integrate the discount rate window as part of their contingency financing strategies, according to the firms. The assistance likewise mentions that the supervisory expectation is that organizations must develop and preserve functional preparedness to utilize the discount rate window—that includes carrying out regular deals—if the window belongs to their strategies.