Liquidity regulation can ensure that, even in these circumstances, officials have at least a bit of time to assess liquidity troubles and the underlying condition of the firm, as well as the degree to which the troubles are idiosyncratic or systemic.
With appropriate insolvency mechanisms available, authorities can then decide whether the firm will recover or needs to be placed into a resolution or liquidation regime, while proceeding in a manner consistent with the Dodd-Frank Act injunction that LOLR measures in exigent circumstances are not to be used for the benefit of a single firm.