Capital Markets Examiner School, Providence, RI

Liquidity Measurement and Management Process

Liquidity Policy

Contingency  Funding Plan

Stress  Scenario  Development

Board  Reporting

On Balance  Sheet Liquidity

Base Case Cash  Flow Analysis

Liquidity  Stress Testing

Independent Review

Examples of Liquidity Stress Events

Idiosyncratic  Deterioration in Asset Quality  Consistent Operating Losses  Rising Reputational Risk  Inability to Access Funding Lines  Downgrade to External Credit Ratings  Prompt Corrective Action Classification Downgrade  Deposit Run/Rapid Redemption of Time Deposits  Changes in Collateral Requirements

Systemic  Funding Markets Cease to Function  Bond Market Fluctuations  Inability to Sell Assets/Securitize Assets  Negative News  Downgrade to External Credit Ratings  Changes in Cost of Significant Funding Vehicles