Though investors and bankers are gushing about the future that the proposed joining of Citicorp and Travelers Group may bring about, a Wall Street sage has warned of new and "probably more intrusive" regulation in an age of huge financial services conglomerates.

The creation of Citigroup, which faces considerable regulatory and congressional hurdles, presents an unprecedented challenge to the doctrine of a bank's being "too big to fail," said Henry Kaufman, the former chief economist at Salomon Brothers.

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