MNI BRIEF: Fed's Rosengren Calls For Tougher Bank Regulations

Boston Fed President Eric Rosengren on Tuesday urged a more proactive supervisory and financial stability stance to prevent financial imbalances from ratcheting up the severity of economic downturns as the Fed sets to hold low rates for an extended period.

"Easy monetary policy requires more guardrails protecting against rising financial instability risks. Without financial stability governance and tools, recessions have the potential to be more severe and fall disproportionately on those that can least afford it," Rosengren said in a speech at the UBS European Virtual Conference 2020.

U.S. post-financial crisis legislation had a "problematic" too-big-to-fail focus, rather than a financial stability focus, Rosengren said. Financial imbalances, if not prevented, would cause recessions to be potentially deeper and longer, requiring more fiscal and monetary stimulus than would otherwise be necessary, he said.