Federal Deposit Insurance Corporation
550 17th Street NW, Washington, DC 20429-9990
Financial Institution Letter
FIL-37-2009
June 30, 2009
Funding and Liquidity Risk Management
Proposed Interagency Guidance
Summary:
The federal banking agencies and the National Credit Union Administration (collectively, the Agencies) are seeking
comment on the attached proposed Interagency Guidance on Funding and Liquidity Risk Management (Guidance). The
Agencies developed the Guidance to provide sound practices for managing funding and liquidity risk and strengthening
liquidity risk management practices. Where appropriate, this proposed Guidance conforms the Agencies' liquidity risk
principles with guidance issued by the Basel Committee on Banking Supervision titled "Principles for Sound Liquidity
Risk Management and Supervision." Comments on the proposed Guidance are due 60 days after the date of publication
in the Federal Register.
Distribution:
FDIC-Supervised Banks (Commercial and Savings)
Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Risk Officer
Related Topics:
Principles for Sound Liquidity Risk Management and
Supervision
Liquidity Risk Management, FIL-84-2008
Part 337.6 of the FDIC's Rules and Regulations -
Brokered Deposits
Attachment:
Notice of Proposed Rulemaking, Interagency Guidance
on Funding and Liquidity Risk Management - PDF 420k
(PDF Help)
Contact:
Kyle Hadley, Senior Financial Analyst,
at KHadley@fdic.gov or (202) 898-6532
Note:
FDIC financial institution letters (FILs) may be accessed
from the FDIC's Web site
at www.fdic.gov/news/news/financial/2009/index.html.
To receive FILs electronically, please
visit http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters may be
obtained through the FDIC's Public Information Center,
3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-
275-3342 or 703-562-2200).
Highlights:
• Recent turmoil in the financial markets emphasizes the
importance of effective liquidity risk management to the
safety and soundness of financial institutions.
• The proposed Guidance clarifies the process that
financial institutions should follow to appropriately
identify, measure, monitor and control funding and
liquidity risk, including effective corporate governance;
provides an overview of appropriate strategies, policies
and procedures, which include risk limits for managing
and mitigating risks; and discusses the management of
intraday liquidity and collateral.
• Institutions are expected to have in place appropriate
measurement, monitoring and reporting systems
commensurate with the risk profile and business
activities of the institution. These systems should
include provisions for stress testing an institution's
liquidity position under various adverse scenarios.
• The Guidance emphasizes the importance of certain
tools for sound liquidity and funding risk monitoring and
management, including cash-flow projections,
diversified funding sources, a cushion of liquid
unencumbered assets, and a well-developed,
documented, and Board reviewed contingency funding
plan.
• Financial institutions should implement effective liquidity
and funding management internal controls and review
procedures to monitor compliance with supervisory
directives, internal policies, and management reporting.
• This proposed Guidance is intended to supplement
existing guidance. FIL-84-2008, "Liquidity Risk
Management," issued by the FDIC in 2008, still remains
in effect.Inactive
550 17th Street NW, Washington, DC 20429-9990
Financial Institution Letter
FIL-37-2009
June 30, 2009
Funding and Liquidity Risk Management
Proposed Interagency Guidance
Summary:
The federal banking agencies and the National Credit Union Administration (collectively, the Agencies) are seeking
comment on the attached proposed Interagency Guidance on Funding and Liquidity Risk Management (Guidance). The
Agencies developed the Guidance to provide sound practices for managing funding and liquidity risk and strengthening
liquidity risk management practices. Where appropriate, this proposed Guidance conforms the Agencies' liquidity risk
principles with guidance issued by the Basel Committee on Banking Supervision titled "Principles for Sound Liquidity
Risk Management and Supervision." Comments on the proposed Guidance are due 60 days after the date of publication
in the Federal Register.
Distribution:
FDIC-Supervised Banks (Commercial and Savings)
Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Risk Officer
Related Topics:
Principles for Sound Liquidity Risk Management and
Supervision
Liquidity Risk Management, FIL-84-2008
Part 337.6 of the FDIC's Rules and Regulations -
Brokered Deposits
Attachment:
Notice of Proposed Rulemaking, Interagency Guidance
on Funding and Liquidity Risk Management - PDF 420k
(PDF Help)
Contact:
Kyle Hadley, Senior Financial Analyst,
at KHadley@fdic.gov or (202) 898-6532
Note:
FDIC financial institution letters (FILs) may be accessed
from the FDIC's Web site
at www.fdic.gov/news/news/financial/2009/index.html.
To receive FILs electronically, please
visit http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters may be
obtained through the FDIC's Public Information Center,
3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-
275-3342 or 703-562-2200).
Highlights:
• Recent turmoil in the financial markets emphasizes the
importance of effective liquidity risk management to the
safety and soundness of financial institutions.
• The proposed Guidance clarifies the process that
financial institutions should follow to appropriately
identify, measure, monitor and control funding and
liquidity risk, including effective corporate governance;
provides an overview of appropriate strategies, policies
and procedures, which include risk limits for managing
and mitigating risks; and discusses the management of
intraday liquidity and collateral.
• Institutions are expected to have in place appropriate
measurement, monitoring and reporting systems
commensurate with the risk profile and business
activities of the institution. These systems should
include provisions for stress testing an institution's
liquidity position under various adverse scenarios.
• The Guidance emphasizes the importance of certain
tools for sound liquidity and funding risk monitoring and
management, including cash-flow projections,
diversified funding sources, a cushion of liquid
unencumbered assets, and a well-developed,
documented, and Board reviewed contingency funding
plan.
• Financial institutions should implement effective liquidity
and funding management internal controls and review
procedures to monitor compliance with supervisory
directives, internal policies, and management reporting.
• This proposed Guidance is intended to supplement
existing guidance. FIL-84-2008, "Liquidity Risk
Management," issued by the FDIC in 2008, still remains
in effect.Inactive