Barclays PLC President Robert Diamond said Tuesday that stripping derivatives desks from banks would put U.S. institutions at a disadvantage.

Diamond said lawmakers should not give in to "populist" calls that make a financial overhaul too restrictive. He pointed out that the proposal to separate derivatives from banks does not have support from the Obama administration.

Further, he said, he believes drastic reforms would make it difficult to synchronize with global regulators.

"You can't separate derivatives from banks because they go hand in hand," Diamond said during a speech to a trade group in New York. "If we don't get it right here, it will be much tougher to harmonize [reforms] globally."

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