Fed Governor: “We Must Break Up the Largest Banks”
Thomas Hoenig, the President of the Federal Reserve Bank of Kansas City, is an interesting guy. For quite some time now, he has been one of the few members of the Federal Reserve who has spoken out against the Fed’s zero-interest rate policy. He has consistently dissented from the FOMC’s statements for this reason, warning that ultra-low interest rates could cause inflation in the future. In a speech back in August, he stated that:
He continued:
It is notable that throughout this period of very low rates, Hoenig has been the lone dissenter. As far as I know, he is also the most vocal Fed critic of “too-big-too-fail” firms, as can be surmised from this 2009 speech “Too Big Has Failed.” So it should really come as no surprise when he called for the breakup of the country’s largest financial firms today, saying:
To me, this is refreshing sentiment to hear from any governmental official. Hoenig finished his speech with this ominous warning:
I don’t expect that Hoenig’s calls to break up the big banks will go anywhere, but it is interesting nevertheless.
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