PHILADELPHIA, March 3 (Reuters) – Boston Federal Reserve Bank President Eric Rosengren said on Wednesday that he “strongly endorses” the idea of requiring banks to hold debt that converts into equity during times of duress.
“Contingent capital is an important part of the solution,” Rosengren told a Global Interdependence Center conference in Philadelphia in response to a question from the audience.
Answering a separate question, Rosengren said it was important that countries coordinate their policies on how to deal with firms seen as too big or interconnected to fail.
But he stressed this was difficult and was likely to take time, especially given that the United States has yet to pass domestic regulatory reform.
Rosengren’s comments come as Congress debates financial regulatory reform proposals. Senate Banking Committee Chairman Christopher Dodd has been expected to unveil revised legislation this week, with a possible vote by the banking panel in mid-March and Senate floor action in April or May. (Reporting by Kristina Cooke; Editing by James Dalgleish)