Federal Reserve governor Tarullo wednesday - sounds like he may be
in favor of limiting the size of TBTF ... interesting speech -
" .....it would be most appropriate for Congress to legislate on the
subject. If it chooses to do so, there would be merit in its adopting a
simpler policy instrument, rather than relying on indirect, incomplete
policy measures such as administrative calculation of potentially
complex financial stability footprints. The idea along these lines
that seems to have the most promise would limit the non-deposit
liabilities of financial firms to a specified percentage of U.S. gross
domestic product, as calculated on a lagged, averaged basis. In
addition to the virtue of simplicity, this approach has the advantage of
tying the limitation on growth of financial firms to the growth of the
national economy and its capacity to absorb losses, as well as to the
extent of a firm's dependence on funding from sources other than the
stable base of deposits"
FRB: Speech--Tarullo, Financial Stability Regulation--October 10, 2012
No comments:
Post a Comment