Federal Reserve Chairman Alan Greenspan warned that the U.S. would strictly monitor foreign banks in the wake of the Daiwa and Barings bank scandals. The Fed expelled Daiwa from the United States last month for covering up $1.1 billion in trading losses, while Britain's Barings collapsed amid losses by a single trader. Greenspan told a House Banking subcommittee exploring U.S. regulators' failure to detect the Daiwa losses that stronger internal controls are needed in a complex global banking system in which such internal failures can quickly cause wider financial havoc. "Whenever something like the Daiwa scandal occurs, congressional leaders are called on both to defend current regulation and to assess possible reforms," says TIME's Adam Zagorin. "Greenspan's recommendation comes with the clout and prestige of the Federal Reserve and more strongly suggests a need for tougher regulation of what's become an extremely complex industry."