TribLIVE

| USWorld


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Break up big banks, Dallas Federal Reserve chief says

REUTERS
Federal Reserve Bank of Dallas President Richard Fisher speaks about the concept of breaking up 'too big to fail' banks to a breakout group at the Conservative Political Action Conference (CPAC) in National Harbor, Maryland, March 16, 2013. REUTERS/Jonathan Ernst (UNITED STATES - Tags: POLITICS BUSINESS)

About The Tribune-Review
The Tribune-Review can be reached via e-mail or at 412-321-6460.
Contact Us | Video | Photo Reprints

Daily Photo Galleries


By Reuters

Published: Saturday, March 16, 2013, 6:24 p.m.

NATIONAL HARBOR, Md. — The largest banks are “practitioners of crony capitalism,” need to be broken up to ensure they are no longer considered too big to fail, and continue to threaten financial stability, a top Federal Reserve official said on Saturday.

Richard Fisher, head of the Fed's Dallas branch, has been a critic of Wall Street's disproportionate influence since the financial crisis.

He took his message to a small audience in a secondary ballroom at the Conservative Political Action Conference in National Harbor.

Fisher said the existence of banks viewed as likely to receive government bailouts if they fail gives them an unfair advantage, hurting economic competitiveness.

“These institutions operate under a privileged status that exacts an unfair tax upon the American people,” he said.

“They represent not only a threat to financial stability but to fair and open competition (and) are the practitioners of crony capitalism and not the agents of democratic capitalism that makes our country great,” said Fisher, who has been a vocal opponent of the Fed's unconventional monetary stimulus policies.

Fisher's vision pits him directly against Fed Chairman Ben Bernanke, who recently argued during congressional testimony that regulators had made significant progress in addressing the problem of too big to fail. Bernanke asserted that market expectations that large financial institutions would be rescued is wrong.

The biggest banks were under scrutiny on Friday during a Senate hearing on JPMorgan Chase & Co., which hid trading losses, according to a report by the Senate's Permanent Subcommittee on Investigations.

The New York-based firm under CEO Jamie Dimon lost more than $6.2 billion last year in a credit derivatives bet by Bruno Iksil, known as the London Whale.

Fisher said his proposal “will not lead to the denial of credit for U.S. corporations.”

The cost from big banks “far exceeds the benefits,” and the United States does not need “to have the largest banks in the world to compete,” Fisher said after his speech.

“The point is to have healthy banks,” he said. “The point is that the taxpayer is not subjected again to the kind of losses or economic disruptions that they face from having concentrated institutions.”

 

 
 


Show commenting policy

Most-Read Nation

  1. Hearing to determine fate of sergeant accused of killing 2 deaf Iraqi boys
  2. Precautions lack year since fatal blast at plant
  3. Mo. mayor steps down over anti-Semitic comments
  4. Justices uphold Michigan ban on affirmative action, giving states room to maneuver
  5. Details about USS Cole suspect’s stint in CIA custody must be turned over
  6. Images best of readied D-Day ships
  7. IRS awards millions in bonuses to its people who don’t pay taxes
  8. Mumps outbreak among Ohio’s largest
  9. Gun background checks miss fugitives
  10. Senator pitches gasoline tax increase
  11. 69% back birth control mandate
Subscribe today! Click here for our subscription offers.