Tarullo Defends Fed’s Move to Supervise Foreign Bank Units

Federal Reserve Governor Daniel Tarullo defended the central bank’s rules requiring stricter supervision of foreign banking companies operating in the U.S., saying the global financial crisis made it clear that regulation needed to be expanded.

Foreign banking organizations with U.S. assets of $50 billion or more must now establish U.S. holding companies subject to Fed oversight, according to a rule published in February. Tarullo said accusing the U.S. of “Balkanization” in regulation was “curious,” given that foreign banks needed large amounts of Fed assistance during the crisis and that the Fed is working with other national regulators to assure financial stability in host countries.