Fed’s new liquidity rule spells more pain for US regional banks
Limit on HTM assets follows move to deduct unrealised losses from capital buffers
The US Federal Reserve is considering a series of rule changes to prevent a repeat of last year’s bank failures, including limiting the amount of held-to-maturity (HTM) assets in liquidity buffers.
Securities classified as HTM for accounting purposes do not need to be marked-to-market, even if they are earmarked as assets that can be sold to raise cash in a crisis. Michael Barr, the Fed’s vice-chair of supervision, noted that this can cause problems when those assets do need to be sold to meet
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