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Tuesday, October 16, 2012

Fed Governor’s Plan to Limit Bank Size Fuels Debate

Fed Governor’s Plan to Limit Bank Size Fuels Debate

By PETER EAVIS
http://dealbook.nytimes.com/2012/10/15/fed-governor-offers-a-way-to-limit-bank-size/?ref=business

Daniel Tarullo of the Federal Reserve has suggested a simple tool that could be applied to individual institutions.
Since the financial crisis, academics, politicians and even former bank chieftains have called for the nation’s banking behemoths to be broken up or shrunk — calls that appear to have fallen largely on deaf ears among Washington’s policy makers.
Now, a powerful insider has suggested a simple tool that could place a tight limit on the size of individual banks. Daniel K. Tarullo, a Federal Reserve governor who oversees bank regulation, said in a speech last week that an important part of a bank’s balance sheet could be capped at a set percentage of the nation’s gross domestic product.

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