Posted on 12/15/2010 6:44:24 AM PST by TigerLikesRooster
Posted on Thu, Dec. 02, 2010
Hoenig: ‘Too big to fail’ is still too big a threat
THOMAS HOENIG COMMENTARY
The world has experienced a severe financial crisis and economic recession. The Treasury and the Federal Reserve took actions that saved businesses and jobs and may very well have saved the economy itself from ruin. Still, the public seems ungrateful, expressing anger at these institutions that saved the day. Why?
Americans are angry in part because they sense that the government was as much a cause of the crisis as its cure. They realize that more must be done to address a threat that remains increasingly a part of our economy: financial institutions that are “too big to fail.”
During the 1990s, Congress, with encouragement from academics and regulators, repealed the Glass-Steagall Act, the Depression-era law that had barred commercial banks from undertaking the riskier activities of investment banks. Following this action, the regulatory authority significantly reduced capital requirements for the largest investment banks.
Less than a decade after these changes, the investment firm Bear Stearns failed. Bear was the smallest of the “big five” American investment banks. Yet to avoid the damage its failure might cause, billions of dollars in public assistance was provided to support its acquisition by JPMorgan Chase. Soon other large financial institutions were found to also be at risk. These firms were required to accept billions of dollars in capital from the Treasury and were provided hundreds of billions in loans from the Federal Reserve.
In spite of the public assistance required to sustain the industry, little has changed on Wall Street. Two years later, the largest firms are again operating with bonus and compensation schemes that reflect success, not the reality of recent failures.
(Excerpt) Read more at kansascity.com ...
the fed et al, did no such thing, they made a bad situation worse....the economy would have healed itself if left alone, it always does, outside intervention from the government and the ‘federal reserve’ is what causes the problems....
I do not give a flying **** if any entity is topo big to fail.
Let them fail.
No more bailouts.
And if any representative and senator votes for a future bailout, vote them out of office as soon as possible.
This cycle must cease immediately.
Washington better start paying attention.
We the people must also insist on term limits.
Start a grass roots campaign to get it done.
A good beginning is to vote every single democrat out of office.
We have seen how democrats run things and Americans abhor what they are doing to the country, running it into the ground, destroying it economically. The terrorists do not have to worry about destroying us economically when the democrats are doing such a great job of it all by themselves. The democrats seem to be in league with terrorists and our enemies. They must be vanquished in order to save the country we love and hold oh so dear.
P!
But regulation is bad for business.
>>Without accountability, we cannot hope to build a national consensus around the sacrifices needed to eliminate our fiscal deficits and rebuild our economy.
Thomas M. Hoenig is the president of the Federal Reserve Bank of Kansas City.<<
Is he saying that he supports an audit of the Federal Reserve Bank?
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