A previous version of this paper circulated under the title “The Optimality of Liquidity Requirements and Central Bank Interventions During Banking Crises.” The author has benefited from the comments and suggestions from David Skeie and from seminar participants at the Meeting of the American Economic Association (AEA), the Meeting of the Financial Intermediation Research Society (FIRS), the Meeting of the Society for Economic Dynamics (SED), and the University of California-Davis.