Bloomberg News

Fed’s Tarullo Sees ‘Costs’ From Inaction on Bank Surcharge

June 16, 2011

June 16 (Bloomberg) -- Federal Reserve Governor Daniel Tarullo said failure to set a capital surcharge above requirements under the Basel III agreement may expose the financial system to excessive risk.

“What is important is not to lose sight of the costs of not acting,” Tarullo said today in testimony to the House Financial Services Committee. The surcharge based on some studies may range as high as 7 percentage points above the Basel capital requirement, Tarullo said, adding that the final figure, now under consideration by regulators, may not be 7 percentage points.

Tarullo said he sees a need to “calibrate” the number based on risks of the assets held by the biggest banks.

--Editors: James Tyson, Kevin Costelloe

To contact the reporter on this story: Jeannine Aversa at

To contact the editor for this story: Christopher Wellisz at

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