Thomas Hoenig: SIFI's put capitalism at risk

[Winehole23]

http://www.kansascityfed.org/publica...e-06-27-11.pdf

[Marcus Bryant]

Here. Here.

[boutons_deux]

Ain't ever gonna happen, Wall St owns, dictates to the govt, both parties.

The last time Wall St got kicked seriously into reform was 1929-1932 and FDR, Pecora, Glass-Steagall. ALL of that is undone now. Dodd-Frank financial reform has been totally gutted, defunded.

But you have to admire the correctness of the guy's extremely radical thinking.

[ElNono]

He's been preaching that tune for a while. See:
http://www.kc.frb.org/speechbio/hoen...a.03.06.09.pdf

Sounds more like a post-mortem though. He's retiring on Oct 1st.

[boutons_deux]

capitalism is a risk in any case, TBTF banks or not.

Every time capitalism has a free reign, unfettered by enforced govt regulations, it s up.

[Winehole23]

In addition to materially increasing the size of the largest financial ins utions, the government's response to the crisis through TARP and other efforts made explicit what many had long suspected -- that certain ins utions had amassed so much economic power, both individually and collectively, that the government simply could not allow them to fail. Further, the manner in which the bailouts were conducted served to exacerbate market distortions by protecting against loss other market participants who, in a normally-functioning market without government guarantees, would have imposed the necessary market discipline to compel the largest ins utions to contain their excessive ac ulation of risk. For example, the bailed-out ins utions' creditors and counterparties largely suffered no losses, reinforcing their belief that they too would be protected in a crisis. Similarly, the executives who were responsible for leading their firms into the crisis retained their outsized pre-crisis risk-enhanced payouts (and often their jobs); and shareholders were largely spared the total loss that they would have suffered absent government intervention. In other words, the bailouts largely rewarded stakeholders who relied on the implicit guarantee of a government bailout, and punished only those who had to pay for it -- the taxpayers.

http://www.huffingtonpost.com/neil-b..._b_892312.html

[coyotes_geek]

Yay bailouts!

[Winehole23]

Barofsky isn't cheering.

[coyotes_geek]

Just expressing my general frustration. Comment wasn't intended for Barofsky.

[Winehole23]

I share the frustration.

[Winehole23]

Federal Reserve Bank of Dallas President Richard Fisher said regulators should break up so- called too-big-to-fail financial ins utions to curtail the risk they pose to financial stability.



“I believe that too-big-to-fail banks are too-dangerous- to-permit,” Fisher said in the text of remarks given in New York today. “Downsizing the behemoths over time into ins utions that can be prudently managed and regulated across borders is the appropriate policy response. Then, creative destruction can work its wonders in the financial sector, just as it does elsewhere in our economy.”

http://www.bloomberg.com/news/2011-1...oth-banks.html

[coyotes_geek]

^^^ Amen to that. Break up the banks!

[boutons_deux]

the banks need to go back to Glass-Steagall

FDIC-insured commercial/retail banks cannot have or be related to insurance companies nor investment banks, nor be allowed to trade on their own account.

All lenders of govt-insured mortgages MUST service the mortgage to maturity (no MBSs).

The above would have a huge reduction in financial system risk, increase stability to a boring level, but the above has no chance in because the financial sector owns Congressa and the Exec, having purchased the current financial deregulation and instability.

[Winehole23]

Two Fed presidents speaking out in favor of a strong resolution authority puts the idea much closer to mainstream status. May take the prospect of another multi-trillion dollar bailout to ignite broader interest, but the seeds are there.

[boutons_deux]

The Fed doesn't doesn't write financial legislation, nor does it make the rules.

I'll put the $100Ms the financial sector spends to buy Congress to maintain the status quo AND kill any attempts at regulation against any ing murmuring from Fed guys.

[Winehole23]

Don't you ever get tired of saying the same thing over and over again?

[Winehole23]

You should go play with a poisonous snake or something. End your misery and ours.

[Winehole23]

in before gfy

[boutons_deux]

Don't you ever get tired of saying the same thing over and over again?

the same applies over and over again.

You guys love sterile debates, trivial "enculer la mouche" one-upmanship, while missing the big picture, which not one of you has any idea of how to fix in practice.

[MannyIsGod]

Don't you ever get tired of saying the same thing over and over again?

Shouldn't that apply to everyone in here?

[Winehole23]

Some more than others, but sure.

[Winehole23]

You guys love sterile debates, trivial "enculer la mouche" one-upmanship, while missing the big picture, which not one of you has any idea of how to fix in practice.

How would you fix it, o great croutons?

[boutons_deux]

One of the items I keep repeating is that there is no fix (within reach), o great CornHole.

Any fix would come only from the Dems, but the Dems can't ever get 60 in the Senate to overcome Repug filibuster of (financial regulation) bills. GAME INGOVER.

(but of course the Dems are also owned by the financial sector, so GAME INGCANCELLED. )

[Winehole23]

Oh, so all we have to do is elect Dems. Problem solved.

[coyotes_geek]

blue team had the opportunity to do something with the banks in 09-10, but decided to fritter it away wasting time on their POS healthcare bill..........