Pandit warns high capital requirements don't guarantee safety

09/25/2011 | Wall Street Journal, The

Citigroup CEO Vikram Pandit warned that higher capital requirements for banks could drive money to less-regulated firms and that they won't guarantee that the financial system is safe. The safety of the system "cannot be guaranteed solely or even mostly through high capital requirements on banks," Mr. Pandit said. "Paradoxically, the higher we set capital requirements for banks, the more money flows into unregulated or less regulated sectors of the system, thereby increasing systemic risk."

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