Why did the FRB on Friday rush out a controversial rule creating a new liquidity facility and tough new correspondent concentration limits? A peek across the pond tells us that it’s a renewed bout of extreme systemic-risk jitters, prompted by the growing liquidity risk in the European banking system. Of course, the new scare won’t just affect bank regulators – it could also drive Congress to wreak still more havoc on banks deemed too big to fail.

We’ve seen this systemic-risk movie before, sad to say. The EU squeeze is a rerun of the liquidity crisis sparked by Lehman’s collapse in the fall of 2008. First, there’s a huge downgrade that forces investors to sell. This leaves them short of operating funds because longer-term operations were funded short. In the EU case, though, the problems are sparked not only by downgrades, but also by the impact sovereign debtors have on currency markets, creating serious exposures not only in straight funding mis-matches, but also currency-driven ones. Investors then drain whatever short-term funds they can find from their banks, putting the squeeze big-time on the biggest banks because they too borrowed short to fund long. Funding is also drying up over the Continent because investors are fearful of the solvency risk associated with putting their funds in banks with big sovereign-risk exposures, sparking a new flight to quality across global capital markets.

As liquidity stress increases, banks are forced into the overnight and intraday markets, rates sharply rise and a vicious spiral of liquidity risk that leads to a credit freeze commences. It’s precisely this process, rightly described by EU observers as a panic, that led to State Street’s finding in its most recent institutional-investor survey that confidence has fallen back to levels not seen since March of 2009. Funding markets are also looking all too much like their configuration in the fall of 2008.

This is a very, very serious scare that we hope stays just that. However, one reason the liquidity-risk crisis has so much potential systemic and macroeconomic impact is that all of the corrective reforms on which most agree to curtail reruns are still in the works. This is in part because new liquidity-risk rules are controversial and, in some cases, over-wrought. But, if this crisis steams ahead during the pending comment periods on the Basel consultative papers, regulators will be tempted to go even farther than before to prove once again that it was the lack of rules that created a crisis, not the regulators’ failure to handle known problems long before they morphed into crises.

And, even as regulators contemplate their limited options and look to the rules to come, Congress is hard at work. The best the EU crisis will do to Congress is spook it to somewhat tougher proposals than those already pending in the Senate rewrite of systemic-risk regulation. But, for any entity deemed too big to fail, the crisis could have far more serious implications, giving advocates of divestiture, break-up and push-out even more momentum.