By Denny Gulino
WASHINGTON (MNI) – The Treasury Department and Federal Reserve
Thursday emphasized to Congress that the none of the world’s large banks
banks can be allowed an advantage under capital adequacy rules still
under development.
Neither Fed Gov. Daniel Tarullo nor Treasury Under Secretary Lael
Brainard touched on — in their testimony prepared for the House
Financial Services Committee — the range of capital surcharges being
considered for banks deemed big enough to influence the financial
system, a battleground subject pitting the banking industry against
regulators in the U.S. and elsewhere.
“There are some who would argue that the United States is moving
too fast, that we should wait to see what other countries implement,”
Brainard said. “I do not agree. I would argue that by moving first and
leading from a position of strength, we are elevating the world’s
standards to ours.”
Tarullo steered away from his comments last week that provoked a
new storm of banking industry protest, in which he, and presumably the
Fed, endorsed the higher end of proposed capital surcharges.
He said only that the capital standards have “yet to be completed,”
but repeated that as the Dodd-Frank Act specifies, the Fed must include
in the universe of systemically-important institutions those with
consolidated assets of $50 billion or more.
The large banks have assembled a powerful coalition of institutions
and lobbyists fighting the capital standards requirements and regulatory
intentions at all levels. Earlier in the week the banks got the support
of the biggest business lobby, the U.S. Chamber of Commerce, which
warned Fed Chairman Ben Bernanke in a letter the standards could hold
the key to U.S. competitiveness and job creation.
In his testimony before the committee, Acting Comptroller of the
Currency John Walsh agreed with the need for caution.
** Market News International Washington Bureau: 202-371-2121 **
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