Fed President Hoenig Warns Against "Perpetuating The Banking Oligarchy"

You gotta love Kansas City Fed President, Thomas Hoenig.  If you're a fan of truth from Fed officials (are you listening B-52?), then Hoenig and Dallas Fed President Richard Fisher should be on your short list for silent kudos.

Six weeks ago, Hoenig broke from Bernanke and testified to the Joint Economic Committee of Congress that "insolvent banks should be allowed to fail."  If you haven't seen that article, you need to read it now.  HERE.

Again last week he went on the truth offensive in a speech in Sheridan, Wyoming.  Listen to some of these gems he delivered and you will understand why we love this guy.

"In the long run, we are all dead but our children will be left to pick up the tab."

"Our financial institutions remain fragile and will require significant additional amounts of capital to regain their stability."

"If we hesitate to make needed changes, we will perpetuate an oligarchy of interests that will fail to serve the best interests of business, the consumer and the U.S. economy..."

"In discussing any aspect of financial reform, one of the most significant changes that must be accomplished is the end of "Too Big to Fail" . . . Institutions must be allowed to fail, no matter their size or political influence...The effect is to lower the costs to these firms and significantly raise costs to the taxpayer and, ultimately, to fundamentally weaken our financial system."

Steve here.  The issue is straightforward.  Wall street has captured the political class.  We've been writing about it since the first live day of this site.  Bush, Paulson, Bernanke, Obama, Geithner, Summers, Dodd, Frank and hundreds more elected and appointed officials have chosen the oligarchic banking interests and their politically-connected bondholders over the interests of taxpayers.

There is much more to his speech, which we have in pdf form below.  I highly encourage you to take 5 minutes and read it.  Hoenig is a classic truth-teller and this one is a beauty.

This speech is not to be missed.

Hoenig Speech PDF

Kansas City Fed President Thomas Hoenig

Comments

[DailyBail]

Bank profits were a sham. Excellent Read.

http://www.bloomberg.com/apps/news?pid=20601109&sid=alC3LxSjomZ8&ref=patrick.net

[DailyBail]

Cash-out homeowners getting help from Uncle Sam. This pisses me off.

http://mortgage.freedomblogging.com/2009/06/05/do-these-homeowners-deserve-help/11597/?ref=patrick.net

[DailyBail]

The Obama administration plans to require banks and corporations that have received two rounds of federal bailouts to submit any major executive pay changes for approval by a new federal official who will monitor compensation, according to two government officials.

http://www.nytimes.com/2009/06/08/business/08bank.html?_r=1

[DailyBail]

From reader Sonic Ninja Kitty.

Amazing piece on the Federal Reserve

http://sonicninjakitty.wordpress.com/2009/05/28/feducation-for-all/

[DanS]

None of the pictures show Hoenig. ??

[DanS]

Each Fed President is independently chosen from their respective District (12). This insure some independence and discenting voices, e.g., Hoenig and Fisher. However, the Obama Admin wants to cease control and select Presidents for the 12 positions. Can you say, "Power Grab."

[Sonic Ninja Kitty]

Hi Daily Bail! Thank you very much for listing my article--I am speechless at the honor!!

And here I thought I was toiling away in complete obscurity :)

[DailyBail]

@Sonic Kitty

It's a very well done background primer on he Fed. You provided excellent links and pullled it together quite well. Good stuff.

[DailyBail]

@DanS

A photo of Hoenig has now been added. Thanks for reading and for providing this information. I will research it and see what I can find.

"However, the Obama Admin wants to cease control and select Presidents for the 12 positions. Can you say, "Power Grab." "

[DailyBail]

Site Housekeeping.

It's Monday night which only means one thing. Another chance to chase the elusive, perfect round of golf and talk shit to my friends for 4 hours.

Henry Blodgett has an interesting post up on clusterstock about LIFE and happiness. I really enjoyed reading the full article and I put several of my thoughts into the comments.

Here's the link.

http://www.businessinsider.com/henry-blodget-life-unplugged-2009-6#comment-4a2d69e514b9b998005e29b7

Steve

[Sean Cook]

When these guys go to Federal Jail they typically only need to sign a "promise to appear" through a government funded release program called Pre-Trial Release. The government spends money to build a case and arrest them, then set a $10,000,000 bail only to be the same government that releases them on their own signature. Are you kidding me? Shouldn’t someone be responsible for them? Shouldn’t someone other than the accused be responsible since the accused has already proven to be irresponsible?

[DailyBail]

@ sonic Kitty

Thanks for your comments over on the clusterstock piece. I think it's an interesting discussion--the search for happiness and I'm glad you took the time to offer your thoughts. I responded to you there and explained further. The advice was from the Dalai Lama not his brother. And Thubten Norbu, the brother, obviously didn''t follow that lifestyle as he was married with 3 sons. Nor did I take the advice personally about sharing one's life.

[DailyBail]

Here is an outstanding summary of Thubten's life in his obituary from the ney york times. He died sometime in the past few years. And below is the wikipedia page which has photos of them both.

http://www.nytimes.com/2008/09/09/world/americas/09iht-obits.4.16018439.html

http://en.wikipedia.org/wiki/Thupten_Jigme_Norbu

[James H]

Speaking of "perpetuating the banking oligarchy," I'm sure you've all heard that some of the banks will be allowed to pay back TARP (reportedly $68B). Here's a link and a video of Chris Whalen discussing why this is yet another confidence game on the part of the Feds. Imagine that. Actually, Whalen calls the whole thing "a deal with the devil."

http://www.financialpost.com/story.html?id=1677848
http://finance.yahoo.com/tech-ticker/article/261030/TARP-Payback-Banks-Regulators-Make-%22Deal-with-the-Devil%22-Whalen-Says;_ylt=AvaLxVEuH2cPyAACDo67WHBk7ot4?tickers=XLF,FAS,FAZ,BAC,JPM,GS,MS

[Ain't Bullshittin']

Just cleanse the Banking gene pool and be done with it..........Start over and make banks hold their loans to matuirty. You will see a direct correlation to loan performance.