Fed’s Tarullo emerges as banks’ key federal foe on regulating risk

Joshua Roberts/BLOOMBERG - Daniel K. Tarullo, governor of the U.S. Federal Reserve, testifies at a House Financial Services joint subcommittee hearing Jan. 18 on the impact of the Volcker Rule on markets and the economy.

 By Zachary A. Goldfarb and Brady Dennis, WashPost, Friday, May 18, 6:57 AM

Daniel Tarullo, the Federal Reserve’s point man on overhauling the financial system, has emerged as the most powerful figure wrestling with the nation’s biggest banks to make them take fewer risks that could endanger the economy.

Tarullo, a former Georgetown Law professor and Democratic Party acolyte who was appointed by President Obama to the Fed, is captaining the effort in Washington to make major banks hold more money in emergency reserve — a concern that has gained renewed urgency after JPMorgan Chase last week announced $2 billion in surprise trading losses.

Days before the losses were announced, JPMorgan’s chief executive officer, Jamie Dimon, and executives from Goldman Sachs and other banks lit into the Fed’s plans to tighten oversight during a closed-door meeting with Tarullo in New York. With the executives at his sides, Tarullo sat poker-faced and largely silent. He told the titans of Wall Street that their views were just one perspective the Fed was considering.

In his first public remarks since the JPMorgan debacle, Tarullo said in an interview that the surprise losses buttress the case for tough new rules forcing banks to hold more in reserve.

(More here.)