{"id":140656,"date":"2010-01-05T12:42:03","date_gmt":"2010-01-05T17:42:03","guid":{"rendered":"http:\/\/blogs.wsj.com\/economics\/2010\/01\/05\/feds-hoenig-warns-on-too-big-to-fail-backs-glass-steagall\/"},"modified":"2010-01-05T12:42:03","modified_gmt":"2010-01-05T17:42:03","slug":"fed%e2%80%99s-hoenig-warns-on-too-big-to-fail-backs-glass-steagall","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/140656","title":{"rendered":"Fed\u2019s Hoenig Warns on Too-Big-to-Fail, Backs Glass-Steagall"},"content":{"rendered":"

A top U.S. Federal Reserve<\/strong> official said Tuesday it’s necessary to consider how banks considered too big to fail can be broken up so they no longer pose a systemic risk to the U.S. economy.<\/p>\n\n\n\n\n
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“Beginning to break them, to dismember them, is a fair thing to consider,” Federal Reserve Bank of Kansas City<\/strong> President Thomas Hoenig<\/strong> told a panel at the annual meeting of the American Economics Association.<\/p>\n

An initial way to define too big to fail banks could be to take firms that have $50 billion or more in assets or have $100 billion or more in assets under management, the Fed official said.<\/p>\n

The U.S. economy could face a similar financial crisis to the one it’s emerging from now if the government doesn’t tackle the problem of some banks remaining too big to fail, several top economists have said at the AEA meeting.<\/p>\n

“We’ve got to start somewhere — and size matters,” Hoening said, calling for rules to address the problem that are simple and easy to enforce.<\/p>\n

To prevent a repeat of the crisis, the U.S. Congress is considering an overhaul of the financial sector that includes new rules to shut down failing firms in an orderly way.<\/p>\n

“We’ve got to strike while the iron is hot … but we must also do it right,” Hoenig said, adding there was a “chance” that new rules could be passed this year.<\/p>\n

Big banks posing a systemic risk to the U.S. economy need to be identified in advance so that the right steps can be taken when they’re at risk, Hoenig said.<\/p>\n

In a separate panel Monday, Simon Johnson<\/strong>, economist at the Massachusetts Institute of Technology<\/strong>, identified six banks as posing a risk: Bank of America<\/strong> Corp., Citigroup <\/strong>Inc., Goldman Sachs<\/strong>, J.P. Morgan Chase<\/strong>, Morgan Stanley<\/strong> and Wells Fargo<\/strong> & Co.<\/p>\n

Hoenig also said he shared former Fed Chairman Paul Volcker<\/strong>’s view that commercial banking activities should be separated from investment banking ones. Volcker heads President Barack Obama<\/strong>’s Economic Recovery Advisory Board<\/strong>.<\/p>\n

“We do need to consider some activities that are in these largest institutions that probably should not be: trading for their account, gambling. That portion … does need to be separated out ” the Fed official said.<\/p>\n

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A top U.S. Federal Reserve official said Tuesday it’s necessary to consider how banks considered too big to fail can be broken up so they no longer pose a systemic risk to the U.S. economy. Hoenig “Beginning to break them, to dismember them, is a fair thing to consider,” Federal Reserve Bank of Kansas City […]<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-140656","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/140656","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/850"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=140656"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/140656\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=140656"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=140656"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=140656"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}