Federal Reserve Bank of New York President William Dudley defended the actions of monetary policy makers in a speech last week, saying Basel III requirements for big banks are necessary to ensure a too-big-to-fail institution does not disrupt the global financial markets. “In the United States, I think we have made more progress in bolstering the resilience of our banking institutions than we have on the other tracks,” he said. There are two elements to this. The first element is the increase in capital that has already occurred. The major U.S. banking institutions are much better capitalized today than they were in the fall of 2008.” “The second element is the international agreement to implement new Basel III capital standards. Not only will Basel III significantly raise the Tier I capital standard when it is fully implemented in 2019, but also raises the quality of capital by putting the emphasis on tangible common equity.” Dudley said the implementation of capital surcharges for systemically important financial institutions is needed to stave off bank failures that could derail the U.S. and broader international economy. He called for increased disclosure from international banks operating in United States, as well, saying it’s hard for American regulators to accurately gauge a foreign company’s balance sheet. “U.S. bank regulators do not have access to the consolidated global balance-sheet information of the foreign banks that operate in the United States (or vice versa for that matter),” he said. “Our examiners see data associated with the foreign firms’ U.S. operations, but not how that fits in with their operations abroad.” “Let me emphasize the importance of the mission — to reform and better regulate the global financial system so it can perform its key financial intermediation function of funneling savings from investors to borrowers even under adverse circumstances. Clearly, the financial system we had in 2008 was woefully inadequate relative to this mission,” Dudley said. Write to Kerri Panchuk