Fed's Tarullo details plans to counter bank runs

11-23-2013 • http://www.cnbc.com,

"There is a need to supplement prudential bank regulation with a third set of policy options in the form of regulatory tools that can be applied on a market-wide basis," Tarullo said at a conference on shadow banking.

He also detailed the Fed's plans to write new rules that would make it less attractive for banks to raise cash in short-term wholesale funding markets, a key factor in the collapse of Lehman Brothers in 2008.

Banks that substantially rely on short-term funding in the interbank market should be required to hold more capital on top of what is already mandated by international rules under the so-called Basel III pact, Tarullo said.

Tarullo, who is the central bank's main policymaker on financial regulation, announced earlier this year that the Fed was working on a short-term funding rule.