Federal governor Daniel Tarullo said this would ensure more there are robust enforcement and compliance mechanisms to prevent transgressions by large banks such as Goldman Sachs, JP Morgan and Morgan Stanley.
In general, compliance procedures and mechanisms to oversee banks active in physical commodities and other asset classes are “not adequate in many cases”, Tarullo told a US Senate hearing in Washington DC.
“Is there a gap in regulation more generally? Some things are present that no US regulatory authority has jurisdiction over,” Tarullo said.
For example, Tarullo said that, at times, neither the Commodity Futures Trading Commission nor the Securities Exchange Commission are able to regulate because something is not a future.
Tarullo suggested that there might be a “third way” for regulation.
On Thursday, the Federal Reserve announced two separate reviews, by its Office of the Inspector General, to ensure that pan-asset class examinations of large banks are thorough...