NEW YORK, Nov. 15 There remains much work to fix
the "too big to fail" bank problem, but breaking up big
financial institutions is still not the answer, said an
influential U.S. Federal Reserve official.
In a speech Thursday evening, New York Fed President William
Dudley took on those who would simply break up big banks and
abandon the more measured approach taken in the 2010 Dodd-Frank
financial reform bill, which reduces the likelihood of banks
failing and lessens the cost to society if they do.
"Too big to fail is an unacceptable regime. The good news is
there are many efforts underway to address this problem. The bad
news is that some of these efforts are just in their nascent
stages," Dudley was to tell a gathering of finance
professionals, according to prepared remarks.
While breaking up too-big-to-fail banks "could yet prove
necessary," he added, "it is premature to give up on the current
approach: changing the incentives facing large and complex
firms, forcing them to become more resilient, and making the
financial system more robust to their failure."