Banks, thrifts and credit unions should be able to explain how they will manage the liquidity risk associated with bank-owned life insurance arrangements.
Federal agencies have included that suggestion in proposed interagency guidance concerning funding and liquidity risk management.
The Office of the Comptroller of the Currency, the Federal Reserve System, the Federal Deposit Insurance Corp. and the National Credit Union Administration published the proposed guidance today in the Federal Register.
The proposed guidance summarizes “the principles of sound liquidity risk management that the agencies have issued in the past and, where appropriate, brings them into conformance with the Principles for Sound Liquidity Risk Management and Supervision issued by the Basel Committee on Banking Supervision in September 2008,” officials write in a summary of the proposed guidance.
The guidance applies to insurers that are regulated by federal agencies as banks, thrifts, bank holding companies, or thrift holding companies as well as to companies that operate mainly as banks or thrifts.