Government support for affordable housing is an essential part of the banks' willingness to support that segment of the market, but a flurry of new regulations could have the unintended consequence of constricting the banks' ability to serve these communities, said Citigroup (C) CEO Vikram Pandit when speaking to the New York State Association for Affordable Housing on Thursday. "In the wake of the crisis there was a rush to impose new financial regulation unlike anything we’ve seen since the Great Depression. There is no question the rules governing the global financial system were in need of real reform. We were running high-speed trains on a rail system built more than 60 years ago," Pandit said. However, Pandit warned that new proposed rules – including the requirement that banks hold more capital than he believes is necessary to protect the financial system – could lead to a situation where banks are too constricted to lend to consumers. He added, "Similarly, the way that some new regulations will require banks to calibrate risk will force banks to lend to borrowers who need credit the most at much higher interest rates—or not at all." Pandit urged the audience of affordable housing advocates to consider that rules tied to the Dodd-Frank bill have yet to be written, and the Basel Committee working on international banking reforms is still in the process of working through their plans. "I believe that the right balance will be struck between systemic safety and financial inclusion—if we all make our voices heard," Pandit said. Write to: Kerri Panchuk.