Fed official: Biggest banks put ‘future of capitalism’ at risk

[Peter1x9]

http://beta.news.yahoo.com/blogs/lookout/fed-official-biggest-banks-put-future-capitalism-risk-161922790.html

In a speech at New York University Monday (http://www.kansascityfed.org/publicat/speeches/Hoenig-NYUPewConference-06-27-11.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 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."

That's because, he argued, the existence of banks that are understood to be "too big to fail" distorts the functioning of the free market. "For capitalism to work, businesses, including financial firms, must be allowed, or compelled, to compete freely and openly and must be held accountable for their failures," Hoenig said. "Only under these conditions do markets objectively allocate credit to those businesses that provide the highest value."

[xchrom]

1. The only thing missing is an expression of 'surprise'. Nt

[msongs]

2. the times call for a strong populist democrat leader. oh well, that's not happening now. nt

[inna]

3. Capitalism does not deserve any (or have much) future. so there

[Sirveri]

4. We should help those banks continue to threaten capitalism.

Best way to destroy something is from the inside.

[defendandprotect]

5. kr