Fed to propose new bank liquidity rules at October 24 meeting

WASHINGTON Thu Oct 17, 2013 4:00pm EDT

WASHINGTON (Reuters) - U.S. bank regulators plan to propose new liquidity requirements for U.S. banks next week as part of efforts to implement an international regulatory agreement, the U.S. Federal Reserve said on Thursday.

International regulators agreed in an accord known as Basel III to toughen oversight of banks after giant firms failed or needed bailouts during the 2007-2009 financial crisis.

The agreement called for capital rules to reduce banks' reliance on debt and liquidity rules, which would ensure they have enough easy-to-sell assets to weather a crisis.

The Fed and other U.S. bank regulators have already approved rules to implement the portion of the agreement that governs bank capital. They also proposed certain additional capital requirements that went beyond the international agreement.

The Fed said in a statement on its website that it planned to propose new liquidity rules at its October 24 board meeting.

During the financial crisis, some banks got into trouble because they did not have enough liquid assets on hand to endure temporary funding freezes.

Liquidity requirements would aim to prevent a repeat of this by forcing banks to hold minimum amounts of assets that could be sold relatively quickly in a crunch.

The rules initially were supposed to take effect in 2015. International regulators decided in January to give banks more time out of concern for the global economy.

(Reporting by Emily Stephenson Editing by Gerald E. McCormick and James Dalgleish)

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