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ensure that registered broker-dealers maintain at all times sufficient liquid assets to (1) promptly satisfy their liabilities-the claims of customers, creditors, and other broker-dealers; and (2) to provide a cushion of liquid assets in excess of liabilities to cover potential market, credit, and other risks if they should be required to liquidate
If this is really "in excess of liabilities" then the bigger the margin lending bubble the bigger the drain in liquidity in the system at large.

IMHO, and somewhat counterintuitively, insisting on liquidity buffers actually decreases systemic liquidity, as it ties down a large fraction of the available liquidity.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Mon May 19th, 2014 at 11:43:48 AM EST
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Well, my 'intuition' was completely useless trying to imagine the effects of that statement.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon May 19th, 2014 at 12:37:17 PM EST
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