Magazine article American Banker

Ending 'Too Big to Fail' Still a Work in Progress: Fed's Tarullo

Magazine article American Banker

Ending 'Too Big to Fail' Still a Work in Progress: Fed's Tarullo

Article excerpt

Byline: Rob Blackwell

WASHINGTON -- Federal Reserve Board Gov. Daniel Tarullo said Wednesday that regulators have not yet eliminated "too big to fail" but continue to make progress in that direction.

Speaking in an interview on CNBC, Tarullo cited increases in capital requirements and steps taken by the Federal Deposit Insurance Corp. to bolster its ability to resolve a large bank, but acknowledged that "there's more to be done."

"This is a process," Tarullo said. "You know it's not a binary matter of a bank being either too-big-to-fail or not. I think it's a process of building up capital [and] of the FDIC continuing to do its very good work in building up its resolution authority. And as I say, us addressing the issues of funding."

Asked if the government would bail out a large bank if it failed now, Tarullo said no, but added "I don't think anybody can be assured of that right now."

Tarullo's comments echo recent remarks made by Fed Chairman Ben Bernanke, who said "too big to fail" was not "solved and gone. It's still here."

Tarullo reiterated plans for the Fed to move forward with proposed capital surcharges on the largest institutions, a move that several countries have agreed to as part of the Basel III accord. He said the Basel Committee has been collecting more data and refining its methodology, but he expects a final list from the international regulatory council later this year that will detail what firms are being charged and how much. …

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