Fed chief calls for US bank size cap

11 October 2012

The size of major US banks should be capped in order to protect the country's financial system against a repeat of its recent financial crisis.

That is the opinion of Daniel Tarullo, governor of the Federal Reserve (Fed), who has called for significant changes to be made with regard to the way financiers are overseen and regulated in the aftermath of the global economic slump.

During a speech delivered in Philadelphia yesterday (10 October), the Fed chief said there are ongoing concerns about the size of the largest American banks, meaning the blocking of big mergers and restricting growth could be a step in the right direction.

Mr Tarullo explained there is a continued perception in some areas of "at least some residual too-big-to-fail quality" for these institutions, Fox Business reports.

This myth was comprehensively debunked in the banking collapse and the Fed leader explained that a culture change is needed to curb lenders' "impulse to grow" regardless of market conditions.

By Asim Shah

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