1 Based on the results of these and other efforts, the Federal Reserve is taking vigorous steps to improve risk-management practices at regulated institutions. Our actions have covered liquidity risk management, capital planning and capital adequacy, firm-wide risk identification, residential lending, counterparty credit exposures, and commercial real estate lending, among other areas. Liquidity and capital have been given special attention.
The crisis has undermined previous conventional wisdom that a company, even in stressed environments, may readily borrow funds if it can offer high-quality collateral. For example, the inability of Bear Stearns to borrow even against U.S. government securities led to its collapse. As a result, we have been working to bring about needed improvements in institutions' liquidity risk-management practices.