"Top Fed Official Wants To Break Up Megabanks, Stop The Fed From Guaranteeing Wall Street's Profits"
See the Huffington Post exclusive on Federal Reserve Bank of Kansas City President Thomas M. Hoenig, and his critical statement on banking policies.
The U.S. should bust up its megabanks and impose strict laws curbing the size and complexity of financial institutions, a top Federal Reserve official told the Huffington Post.Click to the above link to the actual "Huffington Post" link for the full story, including audio archive.
In a 45-minute interview this week, Federal Reserve Bank of Kansas City President Thomas M. Hoenig, who's emerged as one of the few influential voices calling for a fundamental redesign of a broken U.S. financial system:
* Lambasted the tilted playing field that benefits Wall Street banks over Main Street banks;
* Called the idea that the U.S. needs megabanks to compete globally a "fantasy";
* Said Congress should mandate simple, easily understood and enforceable rules -- rather than guidelines -- so regulators can restrain financial firms and rein in the financial system;
* Prodded the Senate to get tougher on permanently ending Too Big To Fail by enacting laws that would take away much of the discretion currently held by policymakers (who bailed out financial firms when confronted with these decisions in late 2008);
* And criticized the Federal Reserve's ongoing policy to keep the main interest rate near zero because it "guarantee[s] a spread to Wall Street", enabling unearned profits and "encourag[ing] speculation."
Hoenig's criticisms echo those made by reformers pushing to remake a financial system that melted down in 2008 after years of excessive risk-taking and loose regulation finally took its toll, causing the worst economic collapse since the Great Depression and costing the nation more than 8 million jobs.