The president and chief executive officer of the Federal Reserve Bank of Boston wants international bank regulators to implement rules similar to Dodd-Frank regulations in order to prevent a financial crisis in Europe.
Eric Rosengren, the chief Boston Fed banker, said that the potential of a Lehman Brothers-type bank failure in Europe is a good indicator of the need of stricter regulations, BizJournals.com reports.
International financial stability is at risk due to a disorderly default by countries like Greece that are in trouble, according to Rosengren.
“In the United States, the Dodd-Frank legislation made significant changes to frameworks for addressing systemically important financial institutions, among other things,” Rosengren said, according to BizJournals.com. “Internationally, many of the impending Basel III rules are similarly intended to address some of the lessons of the financial crisis. I am very supportive of these efforts, but I suspect they can be strengthened and improved.”
Rosengren’s position does not fall in line with many U.S. bankers who have said that Dodd-Frank Act is hurting the financial industry.
Rosengren, however, maintains that new rules are essential in order to prevent a financial crisis in Europe to spread internationally.
“It is critical that we focus on strengthening the financial architecture, so that the struggles of one institution or a group of them no longer poses risks to the broader global economy,” Rosengren said, BizJournals.com reports.