Reserve Governor Daniel Tarullo spoke about “Capital Regulation Across Financial Intermediaries”:

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. At the risk of packing too much into these introductory points, let me also note that an emphasis on a firm’s liabilities is related to, but not synonymous with, an emphasis on its activities. Thus, for example, simply deciding that an intermediary provides mostly commercial banking services or insurance products does not fully answer the question of what its capital requirements should be.

There is a lot here, including on prudential regulation of asset managers, but I particularly liked this:

When concerns are raised about regulatory arbitrage or a level playing field, they are usually in the context of a similar asset being held, or a business activity conducted, by financial firms with different regulatory structures. My discussion today would suggest that attention must be paid to the liability structure of the different firms before deciding whether the asymmetric regulatory treatment is prudent or an invitation to the propagation of new financial risks.

This is it seems to me the core question of financial regulation. There are assets. They are risky; they might go down in value. Someone bears the risk of those assets. If regulation tends to push that risk into entities that are funded with short-term debt from investors who expect it to be money-good, that leads to potential crises. If regulation tends to push that risk into entities with long-term equity-like funding from investors who knowingly bear the risk, that is the best it can do. You can’t get rid of risk, but you should try as much as possible to keep it from being funded by short-term debt with no capital buffers.  Tartullo Speech