Vice Chair Barr Discusses Targeted Adjustments To Liquidity Framework

On May 20, 2024, Federal Reserve Vice Chair for Supervision Michael S. Barr discussed three proposed targeted adjustments to bank liquidity risk management and the Federal Reserve's discount window at the 28th Annual Financial Markets Conference of the Federal Reserve Bank of Atlanta. As discussed in our February 2024 Advisory, Barr's remarks were another sign of increased regulatory scrutiny on bank liquidity risk management and operational readiness to use the Federal Reserve's discount window, following the collapse of three large banking organizations in the spring of 2023. Depositors at these institutions, including high-net-worth individuals and companies, withdrew funding at rates that "greatly exceed the assumptions made in [regulators'] current, standardized liquidity requirements." In January, Acting Comptroller Michael J. Hsu mooted possible changes to liquidity requirements, including the requirement that midsize and large banks have sufficient liquidity