Liquidity Rivaling Credit Quality as Crisis du Jour American Banker (10/30/00) Vol. 104, No. 42 p.9; Garver, Rob
Banks, which are being driven toward capital markets to
finance loans, are experiencing low deposit growth and an
increase in bond market defaults, according to recent studies.
These signs point to an impending liquidity crisis. Banks moving
from their traditional funding sources have many observers
concerned. David D. Gibbons, deputy comptroller for credit risk
at the Office of the Comptroller of the Currency, believes
community bankers are inexperienced in the capital markets they
are increasingly using and should watch out for rapid liquidity
shifts. However, ABN Amro/LaSalle Bank chief economist Carl L.
Tannenbaum, believes dependence on the loan-to-deposit ratio is
no longer useful since all loans are different and banks can hold
highly liquid loans like mortgages and still be insulated from
credit quality swings.