Way back when Microsoft annouced Passport as the way for applications to share identies, namely by having a "trusted" party in the middle (Microsoft) who would validate all the identities. Now this didn't go well for several reasons, the fact that the Banks didn't like the concept of a single organistion basically being able to tax every transaction was certainly one, the lack of general trust in Microsoft's privacy rules was certainly another. The alternative, much prefered by the banks and by people who don't like the idea of one company holding everything is to have a federated security model, and thus was born the Liberty Alliance.
Now federated identity is much to be desired in SOA as it provides a great way to be more loosely coupled around one of the critical NFRs on the systems, but it is pretty hard. Looking over at the Macehiter Ward-Dutton (the analysts who blog) I came across an article on the latest round of companies to pass Liberty certification. This is great news as we move towards more collaborative business applications this sort of security problem is going to become much more common. Imagine doing multi-supplier collaborative applications without a decent federated security, you'd end up in the old B2B application scenario that requires a big blob in the centre.
Liberty will hopefully enable applications to better collaborate between organisations, this is certainly going to be critical as systems become more external and more dynamic.