The Federal Reserve, mindful
that some banks are still so big that their failure could weigh on the
wider economy, said on Monday that it planned to increase the pressure
on large financial firms to shrink.
Daniel K.
Tarullo, the Fed governor who oversees regulatory policies, signaled the
central bank’s intent in testimony that he is scheduled to give before
the Senate Banking Committee on Tuesday. In particular, Mr. Tarullo said
that the Fed would propose special capital requirements for the largest
banks that will be even higher than those demanded under international
banking regulations.
“We
intend to improve the resiliency of these firms,” Mr. Tarullo said.
“This measure might also create incentives for them to reduce their
systemic footprint and risk profile.”
The
speech sets out to update Congress on how much progress regulators have
made with the Dodd-Frank Act, which was passed in 2010 to overhaul the
financial system.
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