Cross-border resolution of troubled banks may be hard – U.S. Fed’s Tarullo

September 30, 2009

Federal Reserve Board of Governors member Daniel Tarullo looks down during his testimony at the Senate Banking Committee on Capitol Hill in Washington,July 23, 2009. (file photo)      REUTERS/Larry Downing (UNITED STATES POLITICS BUSINESS IMAGES OF THE DAY) WASHINGTON, Sept 30 (Reuters) – A member of the U.S. Federal Reserve Board of Governors said on Wednesday it may be difficult to find international consensus on cross-border unwinding of troubled financial institutions.

Daniel Tarullo said time will likely be needed to work out relationships among global financial standard-setting bodies in light of the increased role of the Financial Stability Board, the new policy coordinating arm of the Group of 20 nations.

“For all the virtues of the consensus-based approach involving the relevant national authorities, some subjects will simply be very difficult to handle fully in this fashion. Cross-border resolution may prove to be one such issue,” Tarullo told a Senate committee at a hearing.

Focused on the international framework for modernizing financial regulation, the hearing also hosted Mark Sobel, acting assistant secretary for international affairs at the U.S. Treasury Department.

Referring to agreements from last week’s G20 summit in Pittsburgh, Sobel said, “Each G20 country must now intensify its efforts to help ensure that these commitments are implemented at the national level.”

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