Fed official: Biggest banks put ‘future of capitalism’ at riskSubmitted by bobbyw24 on Thu, 06/30/2011 - 12:29
Are Wall Street mega-banks so powerful and sprawling that they threaten our entire capitalist system? That's the claim being made by one top Federal Reserve official.
In a speech at New York University Monday (pdf), Thomas Hoenig, the president of the Kansas City Fed, argued that the biggest and most complex banks are "fundamentally inconsistent with capitalism." His remarks came just two days after global banking regulators agreed to require big banks to hold onto extra capital in order to reduce the risk of bank failures like those that occurred during the financial crisis of 2008.
"So long as the concept of a [systemically important financial institution, or SIFI] exists, and there are institutions so powerful and considered so important that they require special support and different rules," declared Hoenig, who is known as a hawk on monetary policy, "the future of capitalism is at risk and our market economy is in peril."