Fed's Kohn calls for tighter regulation

A relaxation in banking supervision has contributed to the current turmoil by altering the nature of risk, Donald Kohn, the vice-chairman of the Federal Reserve, said in a call to strengthen rules for investment banks.

Kohn said that laxer regulation had made a handful of the biggest investment and commercial banks "indispensable to the efficiency and stability of the securities markets," which had, as recent events had shown, "given rise to new threats to financial stability".

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