Fed. Governor Daniel Tarullo on Industry Structure and Systemic Risk Regulation

Federal Reserve Governor Daniel K. Tarullo gave a speech discussing the industrial organization (“IO”) of the financial industry, including how research could potentially apply to Dodd-Frank rulemaking and regulatory policy.  Governor Tarullo surveyed various proposals directed at the “too-big-to-fail” problem in financial markets, and summarized the arguments surrounding those proposals from both a policy and IO perspective.  The proposals he discussed were (i) breaking up large financial institutions by reinstating Glass-Steagall restrictions or imposing other affiliation prohibitions; (ii) placing a cap on the non-deposit liabilities of financial institutions; and (iii) requiring financial institutions above a specified size to hold minimum amounts of long-term debt available for conversion to equity.

Click here to view speech in full (links externally to FRB website).