US Fed, banks discuss possible leniency on liquidity threshold for lending

The US Federal Reserve is talking with lenders about potentially going easy on them if they deplete their liquidity reserves while trying to support customers hurt by coronavirus disruption, according to three people with knowledge of the discussions.

Following the 2008 financial crisis, banks built up billions of dollars in liquidity buffers to ensure they could meet their liquidity obligations in times of market stress and keep lending. The Fed is reassuring lenders that they should dip into those buffers if needed, the sources said.