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
16 Jul
TOPO
MÅ JEG ALLER FØRST MINDE OM. da jeg tog på fereie, var der en uvenlig sjæl som ønskede mig såkaldt "..
19
21 Jul
TOPO
Kurshop -  Der findes tusinder af Biotekfirmaer i verden som du kan gå ud og investerer i ! Hvad er ..
16
20 Jul
VELO
Sidder ig gennemlaser tidligere traade og samler her lidt op og vil komme med betragtninger for den ..
13
18 Jul
VWS
Pokerchamp - Du er da gået helt fra koncepterne. Din angreb på meddebatørene er da røget helt ud i h..
12
16 Jul
GEN
Nej problemet med EI er, at der ikke er mange dygtige skribenter (eksperter) tilbage ! Og hvad værre..
12
18 Jul
VWS
sku vi prøve med en afstemning,ang hvem der er mest ude i hampen Alle dem der hellre vil tro på good..
9
16 Jul
VWS
Så er i jo 2, hvis i tager pokerdrengen med så kunne i jo starte jeres eget cirkus fremfor at ødelæg..
9
22 Jul
VWS
Mon dette forum og skribenterne mon nogensinde bliver så voksent, at vi er undgår dette evindelige b..
8
21 Jul
E:VWS
Du kan da umuligt fjerne kernemedarbejdere med 10-30 års erfaring når de ikke engang har haft fabrik..
8
18 Jul
GEN
Skønt - det må være det brede fase Ib studie der afføder disse fase III studier:   http://www.clinic..
8

Tech Companies Send Criticism Along With NSA-Related Data -- Update

04/02/2014 00:06:00
By Danny Yadron Technology companies including Google Inc. and Microsoft Corp. released new figures on the amount of data requests they received from U.S. ..

U.S. Hot Stocks: Hot Stocks to Watch

03/02/2014 14:07:00
Among the companies with shares expected to actively trade in Monday's session is Herbalife Ltd. (HLF). Herbalife Ltd. (HLF) raised its fourth-quarter outl..

Pfizer Study Meets Primary Endpoints

03/02/2014 13:05:00
Pfizer Inc. (PFE) said Monday that a Phase 2 trial of its advanced breast cancer treatment met its primary endpoint. Pfizer said a study comparing the effec..

Most read news

  • 24 hours
  • 48 hours
  • 1 week
1
Proven VCT plc : Result of AGM
2
Publicis Groupe: First Half-Year 2014 Results
3
Proven Growth & Income VCT plc : Result of AGM
4
Wolters Kluwer Legal & Regulatory to Acquire LexisNexis Legal Business in Poland and Divest Canadian Legal Assets
5
ALBIOMA : FIRST-HALF 2014 RESULTS
Euroinvestor around the globe: Euroinvestor.dk | Euroinvestor.se | Euroinvestor.no | Euroinvestor.fr | Forexinvestor.com| Wisselkoersen.nl | Valuta.se | Valutaveksel.no | Divisas.es | Valute.it
Copyright Euroinvestor A/S 2014   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.
 
23 July 2014 04:29:17
(UTC) Dublin, Edinburgh, Lisbon, London
Version: LiveBranchBuild_20140710.1 - EUROWEB4 - 2014-07-23 05:29:17 - 2014-07-23 04:29:17 - 1000 - Website: OKAY