WASHINGTON — Prudential rules dealing with liquidity and other market-related items may be a better regulatory response to the expansion of the asset management industry than higher capital buffers, Federal Reserve Board Gov. Daniel Tarullo said on Monday.
Tarullo said in a speech in Paris that while the growth of asset managers such as hedge and mutual funds is a cause for concern, they do not pose leverage risk comparable to that of banks. The risk of asset managers causing a run could be better managed with market rules than capital rules, he said.
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