The 2008 financial crisis showed how dangerous liquidity problems can be – not just for individual banks, but for the financial system as a whole. Some banks are failing to meet our expectations in terms of the management of liquidity risk. We will therefore be paying particular attention to banks’ internal liquidity management – i.e. the Internal Liquidity Adequacy Assessment Process (ILAAP).
For instance, many of the places that I have visited, such as in the colonias, the Mississippi Delta, Appalachia, and Indian Country, have few bank branches and are located outside of branch-based assessment areas. Banks need to be confident about receiving CRA credit to seek out activities and investments in these areas.