The Asset Liability Committee needs to be a management-level committee, and they need to meet weekly.
Especially in unstable economic times like these,
A quarterly meeting to manage liquidity does almost nothing.
Situations change quickly.
Banks need to give themselves every chance possible to be prepared and manage this liquidity properly.
Think of it like going to the driving range to practice your golf swing:
You go 1 day and take lots of swings and feel pretty good by the end of the day.
But then you don’t go back for 3 months….
You’re starting from square 1 at that point.
But if you devote every Tuesday evening to taking 100 swings at the range,
You’ll actually remember what you’re working on and see improvements over time.
It’s the same way with ALCO meetings.
In 3 months’ time—everything has changed.
But if you meet every week?
You have a chance to catch anomalies as they happen and monitor and adjust liquidity based on a variety of metrics.
Quarterly meetings are simply too infrequent to properly manage liquidity.
And it has a lot to do with why so many banks are getting so badly burned right now.
Digging deep on banks is what I do.