Reprieve on liquidity buffer could prove costly

01/7/2013 | Reuters

The Basel Committee on Banking Supervision's decision to give global banks an additional four years to meet liquidity requirements could prove costly nonetheless, analysts say. Banks will have to reserve more capital as a liquidity buffer with riskier assets, such as bonds backed by home loans. Even so, "it will be the taxpayers picking up the tab when a wrong-way bet by a 'too big to fail' bank turns sour," said Boston University's Cornelius Hurley, a former counsel to the Federal Reserve.

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