Commenting after a speech at the Brookings Institution (in which he recycled his Jackson Hole speech) Fed chairman Bernanke says that banks must prepare for times when liquidity dries up. They can’t rely on the facts that markets will be open and liquid and they must prepare for times when it is not.
Remember, it was lack of liquidity which ultimately doomed Bear and Lehman as they both relied on short-term repo funding for their day-today operations.
