An article in the Wall Street Journal in 2016 discusses proposals by the Federal Reserve for new regulations that would affect banks’ “long-term lending such as aircraft, shipping and project finance.”
a. Does this long-term lending represent an asset or a liability to the banks doing the lending? Does it represent an asset or a liability to the firms borrowing the funds? Briefly explain.
b. The same article refers to a requirement implemented in 2014 that large banks hold more “highly liquid assets.” Give an example of a highly liquid asset found on a bank’s balance sheet.