Solvency

Solvency is entirely a matter of temperament and not of income.

Federally regulated financial institutions were generically analyzed to determine their ability to continue to promote essential services in the event of a major earthquake like those that have been postulated for this assessment. The conclusion reached thus far is that large-magnitude earthquakes pose no significant or unanticipated problems of solvency and liquidity for such institutions. The Federal Reserve System and other regulatory entities have procedures in place that are designed—and have been tested—specifically to provide for the continued operation of financial institutions immediately following an earthquake or other emergency.

Tom dreams of financial solvency.

This is often phrased in terms of whether they are facing liquidity or solvency problems; but I think it’s better phrased in terms of the possibility of self-fulfilling crises, a la Obstfeld.