William C. Dudley, president of the Federal Reserve Bank of New York, has privately raised concerns in recent weeks about a proposed rule that seeks to make the nation’s largest banks safer, frustrating other regulators who see it as a centerpiece of a financial system overhaul and want it to take effect swiftly, the New York Times reported today. The rule, proposed last July and known as the supplementary leverage ratio, would put a stricter cap on the amount of borrowing that the biggest banks can do. Dudley raised the possibility that the rule could inhibit the Fed’s ability to conduct monetary policy. A person familiar with Mr. Dudley’s thinking insisted that he is comfortable with the leverage rule. He took his concerns to Fed officials in Washington merely to help make sure that they had properly considered the rule’s potential effect on monetary policy, this person said. The Fed officials in Washington assessed his concerns but did not think they were serious enough to warrant significant changes to the rule.
