A top U.S. regulator gave a spirited defense on Thursday of new rules forcing foreign banks to hold more capital in their U.S. units, after overseas firms and regulators criticized the requirements.
Federal Reserve Governor Daniel Tarullo said the rules are necessary to protect the U.S. financial system from another meltdown like the 2007-2009 crisis.
"Of course, a few foreign banks would prefer the old system under which they held relatively little capital in their very extensive U.S. operations," Tarullo said in a speech at a Harvard Law School event in Armonk, New York.
"But that was neither safe for the financial system nor particularly fair to their competitors—U.S. and foreign—that hold significant amounts of capital here."
Tarullo said foreign regulators also have applied capital and liquidity requirements to subsidiaries of U.S. banks in their countries that differed from rules enforced by U.S. officials.