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Introductory comments (partial) "Strengthening the quantity and quality of capital held by banks has been a central element of post-financial crisis regulatory reform. Yet, as the topic of this conference reminds us, the crisis also exposed weaknesses in other financial intermediaries that carried systemic implications. … Hence the theme for this session of the conference: In light of this recent history and, more generally, of the steady growth of nonbank financial intermediaries, to what degree should they be subject to the capital regulations developed by the Basel Committee on Banking Supervision and applied to bank holding companies in the United States and to all commercial and investment banks in Europe? At first glance, the answer to this question might seem intuitively obvious. After all, the risk of loss associated with a particular corporate loan or mortgage-backed security or, indeed, any other asset does not vary just because its legal owner is an insurance company or mutual fund, rather than a bank. Yet we all know that regulatory capital requirements sometimes do vary with the nature of the firm … In my remarks this morning, I will explain how the identification of those circumstances should proceed - by looking not at the asset side of a financial intermediary’s balance sheet, but at the liability side. The scope and nature of a firm’s liabilities provide the justifications for capital requirements regulation. Differences in liabilities can, accordingly, sometimes warrant different capital requirements for portfolios of similar assets across firms … My purpose today is not to offer specific proposals, or even a comprehensive conceptual framework, but instead to propose an approach for thinking about the purposes of capital regulation across types of financial intermediaries that will suggest appropriate starting points for shaping - or reshaping - applicable capital regulation. This seems to me a particularly important effort at a time when the financial system is undergoing significant change."

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