Troubled banks are not ‘too big to fail’
Kansas City Federal Reserve Bank President Thomas Hoenig bluntly rejected the argument that any troubled banks are too big to fail at the congressional Joint Economic Committee on Tuesday.
Hoeing called the government to step in and clear out the failing banks showing little support for Wall Street. He warned that until confidence and transparency are returned to financial markets, it will be impossible for us to achieve full economic recovery. In order to restore confidence, several regulatory issues must be addressed.
I believe that failure is an option, Hoenig said in his prepared remarks. I think it is the best solution for getting our financial system and economy on the road to recovery.
In his testimony he said actions that strive to protect the large institutions from failure risk is only “prolonging the crisis and increasing its cost.”
He added that despite the importance of these institutions they “must be allowed to fail regardless of their size, market position or complexity of operations.”
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