Posts Tagged ‘Jerry O’Driscoll’

Big Bank Breakup or Tea Party?

April 4, 2012

by Chidem Kurdas

We’ve been going back and forth on the economics of too-big-to-fail banks but paying less attention to the politics. The most recent ThinkMarkets broadside on banks is Jerry O’Driscoll’s post on the Federal Reserve Bank of Dallas annual report.

In part of the report, the Dallas Fed’s director of research Harvey Rosenblum argues that the new Dodd-Frank regulations are insufficient to deal with the threat posed by too-big-to-fail banks and therefore these need to be broken into smaller entities. He and the bank’s president, Richard Fisher, made a similar point in a Wall Street Journal column.  Some other Fed officials have espoused the position as well.  Read the rest of this entry »

Big Bank Obesity Conundrum

March 5, 2012

by Chidem Kurdas

Is the Federal Reserve a hotbed of trustbusters? Fed officials (as well as some academics) have been calling for forcible downsizing of big banks . “I am of the belief personally that the power of the five largest banks is too concentrated,” Dallas Federal Reserve Bank president Richard Fisher said a few days ago during a visit to Mexico, according to news reports. He’s expressed similar views before, as has Thomas Hoenig, former president of the Kansas City Fed.

Here on ThinkMarkets Jerry O’Driscoll, a Federal Reserve veteran, wrote: “There is no conceivable efficiency gain that justifies the risk these gigantic, risky institutions impose on all of us,” Read the rest of this entry »

Broken Banks, Durable Delusions

September 1, 2010

by Chidem Kurdas

Some 829 commercial banks are at risk of failure, according to the Federal Deposit Insurance Corp.  This year 118 banks already failed and were taken over by the FDIC. At this rate, more banks will fail in 2010 than in 2009. If bank regulators were a commercial bank, they too would have gone bust. But being government entities, they prosper as the industry they oversee declines.

Investment banks dominated the public discussion in the run-up to the gigantic new financial regulation law. Regulation advocates argued that investment banks took excessive risk and needed to be more heavily regulated. Commercial banks were not the focus of the discussion—-because they have been heavily regulated since the early 20th century.

In fact, commercial banks are about as regulated as possible for private enterprises. Further regulation would turn them into an arm of the government—along the lines of mortgage financer Fannie Mae, currently a black hole that sucks taxpayer money. Read the rest of this entry »

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