(CHICAGO) — Big banks are still very vulnerable and may soon face higher capital requirements, according to Federal Reserve Chairman Ben Bernanke. The Fed chief spoke Friday at a conference held by the Federal Reserve Bank of Chicago.
Bernanke said that some banks are so large and complex that there is growing fear over the potential government intervention that would be necessary to prevent their collapse, the Wall Street Journal reports.
“Just so there’s no confusion, I think that ‘too big to fail’ is a very big issue, and we will not have completed the goals of financial regulatory reform unless we have adequately addressed the issue,” Bernanke said Friday, according to the Wall Street Journal.
Bernanke said more and better-quality capital is needed to make larger institutions safer by eliminating or reducing their funding advantage. That way, he said, the large banks have incentive to simplify their firms.
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Madison Park, Keith Allen and Andreas Preuss, CNN