After years of tightness, last year marked a sharp turnaround in community bank liquidity. Banks received a steady stream of cash: falling interest rates triggered mortgage prepayments and the exercise of call options did the same to callable agency securities, while falling equity markets slowed the run of funds into mutual permanent funds and increased the growth of bank deposits.
Given this of the present day abundance of liquidity, some bankers are taking a "What? Me worry?" attitude toward liquidity today.
Yet there are upright reasons to be concerned about liquidity. The in every one's mouth abundance is due to short-run market factors, and the fundamental, long-run
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