Federal Reserve Bank of Kansas City President Thomas Hoenig said for economies to work best, institutions must be allowed to 'fail.'
Economies must "find a balance between financial stability and a stable price environment and in doing so must be able to allow individual institutions to fail," Hoenig said in a speech today in Buenos Aires. ...
"Financial crises will occur despite our best efforts to prevent them," Hoenig said in prepared remarks at an event hosted by Argentina's central bank. "The 'Too Big to Fail' issue will only grow in importance as the consolidation of the financial industry grows in both size and scope in future decades." ...
Hoenig, 61, dissented from a rate cut on Oct. 31 because of inflation concerns. Hoenig doesn't vote this year and will vote next in 2010. Dallas Fed President Richard Fisher has dissented from Federal Open Market Committee votes five times this year, preferring to raise interest rates last month.
Wednesday, September 03, 2008
Fed President Hoenig Says Financial Institutions Must be Allowed to Fail