Banks that are big enough to destabilize markets should be under stricter regulatory oversight, and some rules should be internationally agreed upon, White House economic advisor Paul Volcker said Thursday. Testifying before the congressional Joint Economic Committee, Volcker faulted regulators for missing warning signs that financial companies were assuming too much risk, and he called for “substantial changes” in oversight. “We must not again leave the markets so vulnerable that a breakdown will again threaten the national and world economies,” said Volcker, a former Federal Reserve (Fed) chairman and close advisor to President Barack Obama. Volcker's suggestions for regulatory reform included subjecting big banks to “particularly high” international standards for risk management. Volcker was the latest Obama administration official to say nationalization of struggling banks was unlikely. Instead, he said banks will probably need more government help to get rid of bad assets, and the government may need to own a bigger stake in some financial institutions.
