Thankfully, there are now several web sites that are there to help people like you with bad credit to find the fast personal loans that you need. When you have bad credit, the first thing that you should be looking for is a loan company that If your financial problems have reached the point where you do not see a way out and you feel as though you are drowning in debt, your best way out is through declaring bankruptcy. Filing may well allow you to get your finances back on track
This is the second article in a series of articles on the management of Liquidity Risk. In my first article Managing Liquidity Risk The 2007 Crisis I dealt with the severe liquidity problems experienced by banks worldwide, which began in the summer of 2007 and which heralded the current financial crisis. I then examined the concept of Liquidity Risk Management, and in reviewing the events of that summer I explored the reasons why many banks came under severe stress. The crisis revealed that important issues had been overlooked and ignored. The Basel Committee on Banking Supervision in its 2008 review of the situation provided additional guidance in areas like; · the acceptability of liquidity risk by banks, · ensuring liquidity levels are maintained, · the allocation of liquidity costs, benefits and risks to a banks activities, · identifying and measuring all the liquidity risks, · stress testing, · contingency funding plans, · managing intraday liquidity risk, and · public disclosure as a means to promote market discipline. In this article I deal with the guidance provided in February 2008 Basel Committee document entitled Liquidity Risk Management and Supervisory Challenges. This guidance has been set out in the form of seventeen individual principles. In turn these principles have been grouped into five major categories. I will deal with category and the principle or principles that they each contain in turn. Fundamental principle for the management and supervision of liquidity risk. This is made up of a single principle that essentially places the responsibility of the management of liquidity risk squarely on the bank. There are a number of actions that the bank needs to take to do this, such as ensuring that a strong risk management framework exists and that a bank is obligated to see that it maintains an appropriate level of liquidity to meet its trading requirements. Within the same principle Bank Supervisors are enjoined to ensure the adequacy of the individual banks liquidity risk management framework. Governance of liquidity risk management This section comprises three principles. All relate to the level of liquidity risk that a bank is prepared to take. This includes setting a level of required liquidity to meet the individual banks business strategy, the establishment of an appropriate management structure to manage this risk and the duty of the banks board of directors to review and approve all issues relating to liquidity at least annually. The third principle in this section deals with the need for liquidity costs, benefits and risks to be incorporated in product pricing and for the need for all new products to be approved with a view to understanding the effect they have on and how they are affected by the banks liquidity position. Measurement and management of liquidity risk This is the meat of the proposal. It is made up of eight individual principles. I will deal with each of these principle in turn.
- Banks must have a sound process to identify, measure, monitor and control their own liquidity risk.
- Banks must take a total active liquidity view. This means that they must manage their exposures and their funding across all their business lines, currencies and legal entities at the same time. And they also need to allow for legal, regulatory and practical limits to moving liquidity between business the various entities that make up their business.
- Banks must diversify their sources of funding and they should regularly test their ability to raise adequate funds from these sources at short notice.
- Intraday (as opposed to overnight) liquidity must be actively managed so that it can meet the banks obligations as they arise. Furthermore a bank needs to plan to do this under both normal and strained conditions.
- Collateral must also be actively managed and care should be taken to separate assets which are already tied-up and those that are free.
- Regular stress tests must be undertaken, using different scenarios. This is important as it will help determine if the bank can keep its liquidity requirements and usage within the previously set limits.
- The bank must have a formal emergency liquidity plan. This should also include clear lines of responsibility and escalation procedures. This plan should also be tested regularly.
- Banks are also required to maintain a buffer of unencumbered, high quality liquid assets to meet emergency situations. These assets must also be free of any barriers to their use.