16/03/2013 15:44:00

Fed's Fisher: Too-Big-to-Fail Banks Must Be Reformed

By Michael S. Derby

The leader of the Dallas Fed took his campaign to end the threat posed by too-big-to-fail banks to a conservative activist conference Saturday.

Richard Fisher, who leads the Federal Reserve Bank of Dallas, spoke before the Conservative Political Action Conference, a decidedly unusual venue for a central banker. Mr. Fisher is not currently a voting member of the monetary policy setting Federal Open Market Committee, and he did not address the monetary policy or economic outlook in his prepared remarks.

Instead, the central banker used his speech to again argue that in the wake of the financial crisis, the problem of bank concentration has only gotten worse, and that the Dodd-Frank financial reform legislation that was supposed to help fix the problem didn't.

Mr. Fisher again argued a core of banks have gotten so large that their failure would be a major risk to the system, and because of that, these banks are effectively too big to fail. The official's speech gave him a chance to repeat a list of reforms he believes will reduce the risk of failure and eliminate the advantages to these firms, which he did not name, that come from an implied government back stop.

"Whatever the precise subsidy number is, it exists, it is significant, and it allows the biggest banking organizations, along with their many nonbank subsidiaries (investment firms, securities lenders, finance companies), to grow larger and riskier," Mr. Fisher said.

"This is patently unfair," he said, adding "it makes for an uneven playing field, tilted to the advantage of Wall Street against Main Street, placing the financial system and the economy in constant jeopardy." The complexity of the Dodd-Frank legislation makes it too difficult to enforce, Mr. Fisher said.

The central banker argued that the safety of deposit insurance and the Fed's emergency lending Discount Window should be open only to traditional commercial banks, and "not to the nonbank affiliates of bank holding companies or the parent companies themselves."

He also wants investors and others involved with the parts of banks not able to access the safety net to sign pledges signaling they understand there is no government backup for this part of the bank's operation. Mr. Fisher also wants the biggest financial holding companies to be restructured so they can be put through the bankruptcy process if need be.

The policy maker said in his ideal world, "all banks would be subject to the same regulatory oversight--and most important, they all would be subject to the market discipline exercised by owners and creditors."

Mr. Fisher's idea have largely failed to find traction with other central bankers so far. That said, over recent weeks the issue of what is to be done with these mega banks has been heating up on Capitol Hill, suggesting the ultimate outcome of the issue remains far from settled.

Write to Michael S. Derby at michael.derby@dowjones.com

(END) Dow Jones Newswires

March 16, 2013 11:44 ET (15:44 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.

Post comment

Related debate

  • 1 week
  • 1 month
  • 1 Year
15 Feb
 
En debat i forum i dag løb lidt af vejen, og moderator måtte slette rigtig mange indlæg ”fordi indlæ..
137
14 Feb
VWS
Nu har jeg haft lidt tid til at kigge på det nyligt offentliggjorte regnskab for 2016. Baseret på de..
82
14 Feb
FING-B
Investering er umiddelbart blevet til en vittighed. Før i tiden investerede man i et selskab, man tr..
26
18 Feb
OMXC25
Den rammer da noglenlunde godt.      http://finans.dk/live/opinion/ECE9365426/den-stoerste-trussel-m..
25
15 Feb
FING-B
erikanthon .... ANON ....   Nu er det da vist tiden, at du får et lødigt, ud fra den viden jeg har. ..
25
14 Feb
E:PROTCT
  Jeg har flere gange analyseret det norske forsikringsselskab, Protector, som er et yderst interess..
23
13 Feb
NOVO-B
det er grundlæggende noget vrøvl. Aktilbagekøb mindsker risikoen i en aktie fordi de kortsigtede uds..
15
18 Feb
OMXC25
tonnio: Jeg er ikke i tvivl om, at et meget stort flertal af danskerne ville have stemt ja, til at v..
14
15 Feb
PNDORA
Tak for det svinske svar. Det gav mig muligheden for at se hvor jeg havde misforstået regnestykket. ..
14
17 Feb
 
omglol,   Hvis du er valueinvestor, er Maj Invests Kurt Karas spritnye: "Den rationelle investor" en..
13

Form 8.5 (EPT/RI) - E2V Technologies plc

07/02/2017 07:47:25
FORM 8.5 (EPT/RI) PUBLIC DEALING DISCLOSURE BY AN EXEMPT PRINCIPAL TRADER WITH RECOGNISED INTERMEDIARY STATUS DEALING IN A CLIENT-SERVING CAPACITY ..

Majedie Asset Management Ltd : Form 8.3 - TESCO PLC

06/02/2017 15:31:59
FORM 8.3   PUBLIC OPENING POSITION DISCLOSURE/DEALING DISCLOSURE BY A PERSON WITH INTERESTS IN RELEVANT SECU..

Alliance Trust PLC : Transaction in Own Shares

06/02/2017 07:00:03
6 February 2017  Alliance Trust PLC TRANSACTION IN OWN SHARES  The Board of Alliance Trust PLC ("the Company") announces that on 3 February 2017 the Comp..

Most read news

  • 24 hours
  • 48 hours
  • 1 week
1
JACC: Clinical Electrophysiology Manuscript Featuring BioSig's PURE EP System in Top Five Most Influential of 2016
2
JACC: Clinical Electrophysiology Manuscript Featuring BioSig’s PURE EP System in Top Five Most Influential of 2016
3
BIOHIT GROUP FINANCIAL STATEMENT RELEASE 2016
4
Impinj and STANLEY Healthcare Announce Partnership and Platform Integration
5
Thinfilm Completes Purchase of EAS Manufacturing Equipment for Roll-to-Roll Line

Buy and sell signals

  • Trend
  • Moneymachine

Copyright Euroinvestor A/S 2017   Disclaimer and Terms of Use
Quote information is delivered by Interactive Data.
Data is delayed 15-20 minutes according to the distribution agreements set by the different exchanges.
 
20 February 2017 15:28:47
(UTC+00:00) Dublin, Edinburgh, Lisbon, London
Version: LiveBranchBuild_20170217.2 - EUROWEB7 - 2017-02-20 16:28:47 - 2017-02-20 15:28:47 - 1000 - Website: OKAY