Large Bank Examination Workshop February 2026

Session Objectives (con’t)

 Identify the limited role of front office management of silo liquidity risks  Identify the Treasury area’s role in aggregating risks and planning  Identify the role of the independent liquidity risk area’s review and escalation responsibilities  Discuss liquidity requirements at the broker dealer level versus the bank/bank holding company level and the respective interaction  Explain Comprehensive Liquidity Assessment and Review (CLAR)

7

Bank Crises are Not New

• Post Civil War booming economy w/ reckless expansion. • Panic when large financier of railroad expansion fails. • Lasted more than 20 years.

Panic of 1873

• Economy slows, manufacturing and agriculture at fraction of capacity and foreign investment declines. • Bank runs outside NYC for the first time.

Panic of 1893

• First National City Bank buys $115 million of Northern Pacific RR stock. • Triggers panic and thousands of small investors wiped out.

Panic of 1901

• Market panic leading to runs on banks when NY Stock Exchange has drastic decline. • Exposes inability of banks to acquire currency during emergencies. • FNCB/JPMorgan acts as central bank and engineers bailout.

Panic of 1907

Crash of 1929

• Crash of the stock markets leading into the Great Depression. • Bank runs and closing are common.

• S&L combined net worth (capital) is a negative $18 billion. • 85% of the S&Ls were losing money. • 15% of S&Ls were broke.

S&L Crisis 1980

• Continental Illinois National Bank/Chicago failure. • Largest in failure in FDIC history • First “too big to fail.” • Estimated failure cost to FDIC — $1.1B

1984

• Credit/Sub-Prime Crisis - Multiple financial institutions fail • TARP $700 Billion • Numerous temporary programs to enhance liquidity are implemented by regulators

2008 2023

• “March Madness” – Regional Banking Crisis

8

© Global Financial Markets Institute Inc.

4