Thrift executives support a government plan to streamline liquidity rules but are urging regulators to eliminate the requirements entirely.

The Office of Thrift Supervision in May proposed reducing to 4% from 5% the amount of short-maturity assets institutions are required set aside for liquidity purposes.

The liquidity requirement is intended to regulate the supply of money available for housing. If housing credit is tight, OTS may lower the liquidity requirement to free up more funding.

Thrift executives, writing in comment letters, argued that the secondary market for mortgages has supplanted the need for the 1950s rule.

"The primary source of funding for home loans today is the huge secondary market that has developed," wrote Richard W. Neu, executive vice president of Charter One Bank, Cleveland.

An OTS spokesman said only Congress can eliminate the requirement.

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