Western Independent Banker - January/February 2009 - (Page 14)

extend this program through September 18, 2009. For community banks, which have traditionally viewed brokerage firm money market accounts as a great potential source of new deposits and liquidity, the guarantee on money market funds, albeit temporary, could reduce the potential flow of new deposits from this source. Banks might consider renaming their money market deposit accounts to avoid confusing them with money market funds industry, which has on more than one recent occasion “broken the buck.” Perhaps MMDAs should be rebranded as “Capital Preservation DDAs!” In the midst of the current systemic liquidity crisis, institutional market support mechanisms such as the Federal Home Loan Banks have remained dependable sources of wholesale funding and contingent liquidity. The next few months will likely see a full review of the fi nancial system’s deposit guarantee and wholesale funding infrastructure, including the role of the GSEs. We will soon see how much longer temporary guarantees on non-maturity deposits, unsecured debt and money market funds will last. We’ll likely get greater clarity on the levels of explicit and implicit guarantees of the GSEs by the U.S. government. There will be discussions of additional possible GSE roles such as the creation of a government-sponsored bond insurance function that would allow issuers to obtain guarantees for a fee. Once we’ve steered the ship back to safe waters and restored confidence in our fi nancial system, the nation’s housing GSEs, including the Federal Home Loan Banks, and state housing agencies, should play a key role in returning the fi nancial sector to a “peacetime” condition. For now, community and regional banks have ready access to liquidity. Still, the recent, unprecedented actions that have increased insured deposit limits and enabled guarantees of unsecured debt have sunset clauses with durations that remain in question. Now is the time to ensure that you have fully developed and modeled your liquidity contingency plans and that you are equipped to navigate through all kinds of waters—including our recent “perfect storm.” Richard M. Riccobono is president and CEO of the Federal Home Loan Bank of Seattle. He can be reached at (206) 3402300 or rickr@fhlbsea.com. 14 www.wib.org Western Independent Banker http://www.hamiltonpacific.com http://www.wib.org

Table of Contents Feed for the Digital Edition of Western Independent Banker - January/February 2009

Western Independent Banker - January/February 2009 Contents A Message from the President & CEO Managin Liquidity and Funding During a Recession Staying Liquid in a Time of Regulatory Sea Change Managing Liquidity in a Volatile Rate Environment Regulatory Outlook for Brokered Deposits Deposit Growth and Branch Network Effectiveness Turbo Charging Account Acquisitions FDIC-Insured Sweep Accounts Creating a Contingency Funding Plan WIB Service Corporation Report WIB Calendar New Members Index of Advertisers advertiser.com

Western Independent Banker - January/February 2009

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