NEW YORK Nov 7 One of Wall Street's top
regulators on Thursday said he was not yet convinced by the
arguments of some lawmakers and at least one fellow Federal
Reserve official that breaking up banks that were too big to
fail was the right way to protect the U.S. financial system.
New York Fed President William Dudley instead repeated his
endorsement of so-called living wills for banks, but said those
needed to be twinned with higher capital and liquidity
requirements and incentives for bank management to act to stem
problems when they first arise.
"I am not yet convinced that breaking up large, complex
firms is the right approach," Dudley said in prepared remarks at
New York University's law school.
Doing so might harm the benefits of size that such banks are
able to pass along to U.S. clients, he said.
"The costs incurred in breaking up such firms need to be
considered," Dudley said, adding, "the breakup of such firms
would not necessarily result in a significant reduction in
overall systemic risk if the resulting component firms were
still, collectively, systemic."