Governor Tarullo Delivers Farewell Speech

In his farewell speech before departing the Federal Reserve Board of Governors, Governor Daniel K. Tarullo warned that it would be "tragic" if the lessons of the Great Financial Crisis were forgotten and urged his successor to ensure "a strong capital regime is maintained," according to a Financial Times article.

Tarullo, who became the FRB's top bank supervisor as he helped steer the central bank through the depths of the financial crisis, leaves Wednesday with a reputation as a tough enforcer and key player.

In his parting thoughts, Governor Tarullo suggested that there could be certain tweaks made to Dodd-Frank without endangering financial stability. For instance, he agreed with critics that the Volcker rule "may be having a deleterious effect on market making, particularly for some less liquid issues" and recommended requiring progressively higher amounts of capital as trading inventories age as a solution.

In closing, Tarullo mentioned that it was too early to pass judgements on the merits and flaws of the post-crisis reforms. However, he said that given "the record levels of commercial bank profits in 2016, it would seem a substantial overreach to claim that the new regulatory system is hamstringing either the banking system or the economy."

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