Let Insolvent Financial Firms Fail: Fed's Hoenig (this is good)

[girl gone mad]

Hoenig gets to vote on Fed policy. Good to know there's some dissent from within.

Let Insolvent Financial Firms Fail: Fed's Hoenig
http://www.cnbc.com/id/30324929">CNBC

Insolvent financial firms must be allowed to fail regardless of their size, and sheltering such "too big to fail" institutions risks making the financial crisis worse, a top Federal Reserve official said Tuesday.

In blunt criticism of the government and his fellow central bankers, Federal Reserve Bank of Kansas City President Thomas Hoenig also said that the design of a $700 billion bank bailout last year had created uncertainty and slowed recovery.

"The United States currently faces economic turmoil related directly to a loss of confidence in our largest financial institutions because policymakers accepted the idea that some firms are just 'too big to fail.' I do not," Hoenig told the Joint Economic Committee of the Congress in prepared remarks.

"Yes, these institutions are systemically important, but we all know that in a market system, insolvent firms must be allowed to fail regardless of their size, market position or the complexity of operations," said Hoenig, who will be a voter on the Fed's policy-setting committee next year.

The biggest 19 U.S. banks are being subjected to a battery of so-called stress tests to restore confidence in their soundness, with guidelines on the process due on Friday and the results on May 4.

[w4rma]

1. Finally! Someone with a good grasp of the situation that has some power over it! (nt)

[Selatius]

2. I'd be surprised if Hoenig becomes chairman of the Fed one day with his views.

Such views do nothing but anger powerful interests on Capitol Hill that seek preferential treatment, such as billion-dollar bailouts and corporate welfare in the form of federal funds, grandfather clauses, and unequitable laws.

[notesdev]

3. Another take on Hoenig

Pointing out that what Hoening said under oath contradicts what he has said while not under oath.

http://market-ticker.org/archives/978-The-Feds-Hoenig-Liar.html

[girl gone mad]

4. I read that, but I would still give him..

the benefit of the doubt. Maybe he's changed his mind since then. I'm sure he made those earlier comments under pressure.

[westerebus]

5. But, judge..

my client was under duress and later recanted under oath to the Congress.

Judge: The jury is instructed to take these fact under consideration.

Chief prosecutor: That's not what he said when the company guys water boarded him. Judge, you have to allow that declaration to stand for the good of the Nation and all the secrets it contains.

Judge: The jury is instructed to keep the plea of guilty, by reason of duress, a secret for the good of the Nation.

Jury Foreman: So the SOB is guilty?

Judge: Good enough for me. Next.