The crisis also highlighted weaknesses in liquidity management by major firms. Short-term secured funding of long-term, potentially illiquid assets – through repurchase agreements and asset-backed commercial paper conduits, for example – became unavailable or prohibitively costly during the worst phases of the crisis, both here and abroad.
In response, the Federal Reserve helped lead the Basel Committee's development of revised principles for sound liquidity risk management, which in the United States are being incorporated into new interagency guidance that reemphasizes the importance of rigorous stress testing to determine adequate liquidity buffers.