Kansas City Federal Reserve Bank president Thomas Hoenig holds contrarian views on regulatory reforms that haven’t received as much attention as his stance on interest rates.
He opposes proposed reforms that would have the Federal Reserve regulate the nation’s 20 largest banks but not the 6,800 or so smaller regional and community banks.
Such a move would strip the Fed’s 10th district, which includes Colorado, of any regulatory jurisdiction.
The Federal Reserve, as the lender of last resort, would extend credit blindly to smaller banks during a crisis under the proposed reforms, Hoenig said.
The banks the Fed knows best, the biggest ones, would be more likely to get assistance in a crisis, he said.
“We will be changing to the central bank of Wall Street from the central bank of the United States,” Hoenig said of the Federal Reserve.
More broadly, Hoenig rejects the idea of “too big to fail” and has called for megabanks to be broken up along business lines so they don’t require government rescues in the future.
He said it upsets him that the largest banks that contributed to the crisis and received federal help are coming out of it stronger, while smaller community banks more likely to lend locally are being left at a competitive disadvantage.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
