Federal Reserve Governor Daniel Tarullo is pushing an agenda to regulate banks beyond the restraints in the Dodd-Frank Act, including making them fund more of their assets using long-term borrowing, Bloomberg News reported today. The Fed and the Federal Deposit Insurance Corp. are holding preliminary discussions on a rule that would require holding companies for the largest U.S. banks to maintain a minimum amount of long-term debt that would aid in winding them down in case they fail, FDIC spokesman Andrew Gray said. As the Fed governor in charge of bank supervision, Tarullo leads the central bank’s effort to implement the 2010 Dodd-Frank Act and is now pressing beyond it to limit the kind of systemic risks that required taxpayer-funded bailouts in the 2008-2009 financial crisis. Tarullo’s agenda for reducing risk also includes strengthening supervision of so-called shadow banking that falls outside traditional regulation and limiting the risk that the biggest banks once again become too big to fail through mergers and more complexity.
