Fed Can Back Up Tough Talk on Bank Behavior With Action

Bloomberg: The Federal Reserve has plenty of power to follow through on regulatory threats made yesterday to top bank executives aimed at curbing misbehavior on Wall Street, even if it can’t order firms to break up.

“The Fed has a powerful bully pulpit that should not be underestimated,” Mike Mayo, an analyst at CLSA Ltd. in New York, said. “It has the authority to approve or disapprove the ability of banks to return capital to shareholders.”

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