NEW YORK Feb 1 The United States could adopt
even broader reforms of the wholesale funding markets than
currently being considered, including forcing firms to rely more
on longer-term funding or expanding the U.S. Federal Reserve's
backstop, an influential Fed official said on Friday.
New York Fed President William Dudley warned that extensive
activity in the money markets and tri-party repo markets takes
place without proper safeguards against runs and fire sales, and
he urged U.S. lawmakers to take a closer look.
Without endorsing a particular path, he suggested the
government could curtail short-term wholesale finance,
dissuading financial institutions from using such funding, or it
could decide to extend access to the Fed's discount window to
firms that are "much more socially useful than others."
"Regardless of where we come out on these questions, we must
make the basic structure of the wholesale funding market as
sound as possible," Dudley told the New York Bankers
Association, according to prepared remarks.
"Thus, we must push ahead with tri-party and money fund