NEW YORK, May 9 (Reuters) – The United States is falling
short in its effort to end the problem of too-big-to-fail banks
and should require higher capital and adopt a fresh approach to
winding down firms that face bankruptcy, a top Federal Reserve
official warned on Thursday.

In a speech, Philadelphia Fed President Charles Plosser
threw his weight behind growing momentum among regulators and
politicians to crack down on big banks some five years after the
global financial crisis led to massive government bailouts and a
deep recession.

NEW YORK (Reuters) – A top Federal Reserve official on Thursday gave only lukewarm support to a fresh drive by regulators to increase capital at big banks, arguing capital buffers are important but just how much more is needed remains up for debate.

Jeffrey Lacker, president of the Richmond Federal Reserve, said that broker dealers “deserve special attention” in this debate. Some of his colleagues, including Boston Fed President Eric Rosengren, have suggested requiring higher capital at such firms.

NEW YORK (Reuters) – Next to nothing stands in the way of a destabilizing fire sale in a vast part of U.S. financial markets if a dealer were to default, top Federal Reserve researchers warned in a paper that aims to rejuvenate debate over supervising the industry.

The paper on the triparty repo market, published Tuesday, finds regulators have “limited” tools to stop dealers from rapidly selling off these assets when they face default, and, once a dealer defaults, they have “no established” tools to stop investors from dumping the assets.