Federal Reserve Bank of New York president William Dudley Monday evening suggested that it might be appropriate for the Federal Reserve and the Securities and Exchange Commission to constrain the lifeblood of Wall Street to “monitor and limit the buildup in leverage at the major securities firms and the leverage extended from these firms to their clients and counterparties.”

Dudley told a Columbia University audience that many years of assuming the Fed cannot recognize and deflate bubbles in advance is a concept being reevaluated in the wake of the tremendous losses from the financial crisis.

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