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
27 Sep
OMXC20CAP
Så mangler vi bare, at du sletter din profil !   :D   Gobe
50
11:00
PNDORA
Goodwrench!!! Jeg er glad for, at du tjener mange penge. Jeg er glad for, at du følger en strategi, ..
29
08:53
NOVO-B
  Jeg har tidligere (blandt andet 8/8 2016) analyseret Novo og offentliggjort min beregning af, hvad..
21
10:42
PNDORA
  Jeg har flere gange, senest den 4. juli 2016, analyseret og forklaret Pandoras forretningsmodel og..
19
23 Sep
NETS-TEMP
Det her er en klassisk case, hvor kapitalfondene på for kort tid, har fået lov til at realisere en s..
17
25 Sep
 
Professor Jesper Rangvid fra CBS kom fredag med en stor kritik af private danske aktionærer. Han har..
14
26 Sep
SDRLO
Jeg vil gerne påtage mig selv status som euroinvestors officielle lortemand. Jeg advarer mod lorteak..
13
26 Sep
OMXC20CAP
Er der ikke en admin eller sådan noget der kan slette baronen? Magen til evnesvag person der er yder..
13
26 Sep
FING-B
Please, lad nu idioten være...   Det er jo kun fordi vi bliver ved med at fodre disse total idioter ..
11
21 Sep
BAVA
  Betydningen af de reviderede data er nok begrænset omend de peger i den rigtige retning.   Når jeg..
11

HSBC Bank Plc : Form 8.5 (EPT/RI) - London Stock Exchange Group Plc

28/09/2016 11:32:07
FORM 8.5 (EPT/RI) PUBLIC DEALING DISCLOSURE BY AN EXEMPT PRINCIPAL TRADER WITH RECOGNISED INTERMEDIARY STATUS DEALING IN A CLIENT-SERVING CAPACITY ..

Holding(s) in Company

27/09/2016 15:05:30
For filings with the FCA include the annex   For filings with issuer..

Alliance Trust PLC : Net Asset Value(s)

27/09/2016 13:14:59
ALLIANCE TRUST PLC                                    At the close of business on Monday 26 September 2016: The Company's NAV per ordinary sha..

Most read news

  • 24 hours
  • 48 hours
  • 1 week
1
UBISOFT ENTERTAINMENT : Ubisoft® acquires mobile publisher Ketchapp
2
CrossAmerica Partners LP: Announces the Closing of its Acquisition of Assets of State Oil Company of Illinois
3
THE SOI INDUSTRY CONSORTIUM PRESENTS ITS INAUGURAL AWARDS IN SHANGHAI, RECOGNIZING OUTSTANDING INDIVIDUALS FOR THEIR CONTRIBUTIO
4
EDF: Decision of EDF Board meeting on 27th September 2016 regarding Hinkley Point C
5
Successful completion of regulatory consultations to progress filgotinib to Phase 3 in inflammatory bowel disease

Buy and sell signals

  • Trend
  • Moneymachine

Copyright Euroinvestor A/S 2016   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.
 
28 September 2016 14:38:27
(UTC) Dublin, Edinburgh, Lisbon, London
Version: LiveBranchBuild_20160921.1 - EUROWEB4 - 2016-09-28 15:38:27 - 2016-09-28 14:38:27 - 1000 - Website: OKAY