Liquidity

The family-owned bank from the South and the New York commercial lender each would fill a clear need for the other. First Citizens would gain business lending expertise and an online deposit-gathering platform, and CIT would get the cheap deposits it coveted.

Many community banks need brokered deposits to help fund loans, so policymakers must strike the right balance between promoting liquidity and guarding against reckless lending.

The flood of liquidity that accompanied the pandemic recession isn’t likely to subside anytime soon. Banks will have to employ a mix of securities buying, hedging and other balance-sheet-management tricks to prop up margins longer than initially imagined.

Congress should pass legislation that would allow Home Loan banks to backstop deposits by local governments at commercial banks and lower the cost of bond financing, two mayors argue.

For all the damage from the pandemic and economic downturn, this crisis has not impacted liquidity. Lawmakers would be foolish to permanently alter the Central Liquidity Facility.