* OCC’s Dugan sees some benefits in large financial firms
* Says explicit caps on size carry risks
WASHINGTON, Nov 13 (Reuters) - A top U.S. bank regulator warned on Friday against legislative proposals that would break up financial firms if they were deemed too large.
Comptroller of the Currency John Dugan said major corporations need sizable financial firms to serve their needs, and said restrictions on size could open the door for non-U.S. financial firms to fill the void.
“I do worry about artificial caps on size,” Dugan told reporters on the sidelines of an American Bar Association conference.
The idea of giving government the power to identify and break up financial firms that are “too big to fail” has gained some ground in the U.S. Congress and internationally.
Senator Bernie Sanders introduced legislation last week that would allow regulators to preemptively break up some firms, even before any signs of instability.
Representative Paul Kanjorski, the Democratic chairman of the capital markets subcommittee in the U.S. House of Representatives, is also working on a break-up power amendment.
His amendment would give a government systemic risk council break-up power, with clearance from the president.
It is not clear if such legislation will gain wide support in Congress or be included in the broader effort to overhaul financial regulation in the wake of the worst banking crisis since the 1930s.
Dugan, who supervises some of the nation’s largest banks, said regulators need to manage risks that come along with size of giant financial firms, but said explicit limits is not the answer. (Reporting by Karey Wutkowski; Editing by Tim Dobbyn)
