by Jerry O’Driscoll
Thursday at the Cato Monetary Conference, Dallas Fed President Richard Fisher called for the end of of the too-big-to-fail doctirine. He identiifed the largest financial institutions as the source of excessive risk taking. He also repeated his claim that these institutions interefere with the conduct of monetary policy.
Fisher offered a middle ground between two strategies discussed on ThinkMarkets: steeper capital requirements or beaking them up. He advocated forcing the largest banks to give up some of their riskiest operations. In effect, that is forcible downsizing.
This is a noteworthy call coming from within the Fed itself.