WASHINGTON — The U.S. government’s ability to deal with faltering financial firms needs to be spelled out by lawmakers to send a clear message to financial markets, Federal Reserve Bank of Kansas City President Thomas Hoenig said Wednesday.
Hoenig said Senate lawmakers considering a broad financial overhaul need to ensure that “discretions are eliminated or minimized” when it comes to the government’s authority to deal with “too big to fail” firms.
He was appearing on Capitol Hill with three other regional Fed presidents to lobby lawmakers on aspects of the overhaul legislation affecting the Fed and its 12 regional banks. Their primary focus was on maintaining the Fed’s oversight of thousands of state-chartered banks and bank-holding companies that a Senate measure would transfer to the Federal Deposit Insurance Corp., but lawmakers leaving the meeting said they discussed a range of issues.
Sen. John Ensign, R-Nev., told reporters there was “broad agreement” among the regional Fed presidents that the current Senate bill would not end the problem of “too big to fail” institutions. It was not clear whether Fed officials were remarking on a formal agreement reached Wednesday between Sens. Christopher Dodd, D- Conn., and Richard Shelby, R-Ala., or previous iterations of the legislation.
