Fed Reserve Pres in Kansas Thomas Hoenig: Too Big has Failed (could this be nationalization Friday?

[RedEarth]

by CalculatedRisk on 3/06/2009 01:06:00 PM
This seems like a break in the ranks ...a call for temporary nationalization...although Hoenig is speaking for himself (not the Fed), this might indicate a change in direction.

From Kansas Fed President Thomas Hoenig: Too Big has Failed

We have been slow to face up to the fundamental problems in our financial system and reluctant to take decisive action with respect to failing institutions. ... We have been quick to provide liquidity and public capital, but we have not defined a consistent plan and not addressed the basic shortcomings and, in some cases, the insolvent position of these institutions.

We understandably would prefer not to "nationalize" these businesses, but in reacting as we are, we nevertheless are drifting into a situation where institutions are being nationalized piecemeal with no resolution of the crisis.

here are several lessons we can draw from these past experiences.

• First, the losses in the financial system won’t go away – they will only fester and increase while impeding our chances for a recovery.

• Second, we must take a consistent, timely, and specific approach to major institutions and their problems if we are to reduce market uncertainty and bring in private investors and market funding.

• Third, if institutions -- no matter what their size -- have lost market confidence and can’t survive on their own, we must be willing to write down their losses, bring in capable management, sell off and reorganize misaligned activities and businesses, and begin the process of restoring them to private ownership.



more.........

http://www.calculatedriskblog.com/2009/03/feds-hoenig-too-big-has-failed.html

[aquart]

1. Well, so far I agree. Go for it.

At least all the accountants in the country will have jobs.