FDIC eyes tougher rules for big banks

The Financial Times reports:

American banks should ringfence their riskier investment banking operations, according to a top financial regulator who wants the US to adopt restrictions similar to those proposed last week by Britain’s Independent Commission on Banking.

Sheila Bair, chairman of the Federal Deposit Insurance Corporation, told the Financial Times: “I think [for] the very largest ones we will need to see some structural changes. I’d like to get some public comment on the idea that if you have an investment banking affiliate . . . that [should be] on standalone liquidity and capital.”

She warned that regulators now had the authority to demand that US banks break themselves into smaller parts – and it “could and should be used”. Citigroup, Bank of America and JPMorgan Chase, which combine retail and investment banks, could be affected.

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