WASHINGTON Feb 25 Regulators need to do more
work to make sure the biggest U.S.-based banks are safe and
protect taxpayers from costly bail-outs, Federal Reserve
Governor Dan Tarullo said on Tuesday.
"I don't think that we're at, or even really close to, the
point at which we can say, 'Okay, now we can be pretty
comfortable that along the spectrum of concerns we've come far
enough that we're hitting about the right trade-off'," Tarullo
said in answer to a question as to whether regulators had solved
the 'too-big-to-fail' issue.
Regulators also need to address the habit of large Wall
Street banks to fund themselves in short-term interbank markets,
a key cause of the 2007-09 crisis, Tarullo said, after
addressing the National Association for Business Economics.
"I will say that both with respect to the largest financial
institutions and with respect to the financial system more
generally, that short-term wholesale funding system is really
critical," Tarullo said.
The Fed is working on a rule to force banks which are
heavily reliant on these markets to hold more capital, and a
proposal is expected soon.