Posted on 02/24/2011 11:02:21 AM PST by FromLori
Federal Reserve Bank of Kansas City President Thomas Hoenig on Wednesday said the U.S. central bank was risking a new financial crisis with its easy-money policies and urged regulators to break up the biggest banks.
Hoenig, one of the Fed’s most outspoken internal critics, warned monetary policy should be tailored “so you don’t overshoot and cause the next crisis.”
The maverick Fed official was also sharply critical of the regulatory overhaul passed last July, saying the risks to the U.S. economy from the largest financial institutions are even worse following the approval of the Dodd-Frank law.
Hoenig’s remarks are likely to fall on deaf ears. Fed Chairman Ben Bernanke believes the fragile U.S. economy still needs support from the central bank’s low-interest-rate policy. And last week, Bernanke told Congress regulation has made great steps forward thanks to Dodd-Frank.
Speaking at a Women in Housing and Finance lunch in Washington, Hoenig said he voted against the Fed’s easy-money policies throughout 2010 for fear it would lead to excessive speculation and risk-taking. Hoenig is concerned low rates will harm the economy by causing prices to rise suddenly or by creating speculative asset bubbles, like the housing bubble behind the 2008 financial crisis.
Most Fed officials, including Bernanke, disagree, arguing that low interest rates are needed because unemployment remains so high more than 18 months after the recession ended, while inflation is still low.
Asked how he could advocate tighter policy when unemployment is still so high, Hoenig said the Fed should think about the long-term implications of its actions. Monetary policy is a “powerful tool” that can have “unintended consequences.” He pointed out the recent crisis came about following a period of very low rates.
In his prepared remarks, Hoenig said the U.S. must end its implicit “too-big-to-fail” guarantee for the biggest
(Excerpt) Read more at blogs.wsj.com ...
Tell us about it those TBTF’s helped get obama elected.
Barack’s Wall Street Problem is Now America’s
http://www.noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/
JPMorgan CEO Jamie Dimon Donates Serious Cash to Democrats
http://www.opensecrets.org/news/2009/07/jpmorgan-ceo-jamie-dimon-donat.html
You better believe they are. I am beginning to hear lately that we are going to have QE3 for crying out loud. No one at the fed wants to admit that they shot all their bullets and failed at reviving the economy. In some cases they have made it substantially worse. This cycle will never end.
The recession is the solution, not the problem. We can put off the “pain” and that is the best we can do.
Lots of chatter coming out of these Fed banks lately. Pres of the K.C. Fed called for breaking up the big banks.
Yes but actions speak louder then words I’ll believe it when I see it those TBTF banks all supported obama lloyd blankfein is a lifelong democrat.
Economics bump for later........
“You better believe they are. I am beginning to hear lately that we are going to have QE3 for crying out loud. No one at the fed wants to admit that they shot all their bullets and failed at reviving the economy.”
Not until after QE12,357,898,278,123,809,570,912,348,751,359,013,475,039,217,039,217,623,907,604,976,234,790,672,304,672,390,467,290,376, at least.
“Pres of the K.C. Fed called for breaking up the big banks”
You mean like the Fed?
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