Kansas City Federal Reserve Bank President Thomas Hoenig calls for Wall Street banks to be broken up

Kansas City Federal Reserve Bank President Thomas Hoenig calls for Wall Street banks to be broken up

www.telegraph.co.uk

“I am convinced that the existence of too-big-to-fail financial institutions poses the greatest risk to the US economy,” Kansas City Federal Reserve Bank President Thomas Hoenig said.

“They must be broken up. We must make sure that large financial organizations are not in position to hold the US economy hostage. We must not allow organisations operating under the safety net to pursue high-risk activities and we cannot let large organisations put our financial system at risk.”

(visit the link for the full news article)

This story sort of has me scratching my head, not sure WHAT exactly to think about it.

On the surface, I would ABSOLUTELY agree with him that the primary Wall street criminal cabal should be put out of business, at the very LEAST.

But on the other hand, aren't these two institutions inter-linked, intimately? Isn't it these same Wall street institutions who FOUNDED the fed?

If so, how exactly would that work? And to what ultimate end?



www.telegraph.co.uk
(visit the link for the full news article)

reply to post by DimensionalDetective


The Fed has to change it's public face..
Too many are awake now to their manipulation..

Taking the focus of them and aiming it at the very banks they bailed out is mere smoke and mirrors..

If they let any banks fail, it will be the ones they want to fail..Not their mates..

I read the title wrong, I thought it said "...wants the wall street bank to be BLOWN up." Now there's an interesting idea, might solve a few problems.

reply to post by DimensionalDetective


Dimensional, My interpretation of the current events of the world and this is that they are somewhat related. The world is under this illusion that money holds the power. They know in reality that money is the illusion and it's unsustainable. The American Dollar is going to crash along with the entire global economy. They are giving some a chance to get out now legally before "change" comes to the markets. But someone also hinted here that the ones they let live are their buddies. I think the opposite in fact. I think the ones they "target" are going to be the ones they want to live into their next order of control.

Watch this space.

reply to post by DimensionalDetective


It would be tricky to implement, but in a sense it is no difference than the government coming in and requiring the large public accounting firms to get out of the consulting business. The conflict of interests were huge. The auditor comes in and tells you that you have a tax reporting problem that is going to be raised as a "serious concern" on your external audit - not good. But he then tells you that if you spend $10M on a tax reporting solution that is provided by the consulting arm of his firm, you'll get a green light on tax reporting.

With banks, you would have to separate the investment banking arm from both the brokerage arm and the retail and commercial banking sides. You would not have the investment bank taking short positions while at the same time having the brokerage arm was telling their clients to dump the stock, making the short a sweet position. You would remove massive amount of capital from the firms that is currently being used to manage their own book. JP Morgan, for example would not be able to play the market with deposits they receive from Chase retail bank branches. Back a few years ago, Goldman was actually betting the housing market short at the upper levels of the firm while at the same time slapping their traders on the back for trading the housing book like wild fire. They knew that the traders would blow up and had a massive hedge against that. Not a problem with a firm like Goldman, but when you have that kind of nonsense going on with a firm what has a retail bank, brokerage and commercial bank and your fooling around with that dough, it can be a melt down.

Investment banks have extremely high risks, which is why investment bankers make a ton of money. When you have these mega financial institutions, what you have is a high risk arm making investments from a low risk arm (retail banking). Ultimately that creates a situation where should a bank blow their book up, the retail arm would potentially be unable to service withdrawls. Same with the brokerage arm. A ton of folks move to cash and look to take it out of the account and the brokerage can't come up with the cash.

It would also eliminate the absolute opaqueness of a financial institution's stock. You have absolutely no ability to ascertain the level of leverage nor risk these financials are taking on, making owning the stock in one an absolute gamble. It does not matter if the commercial bank has a $billion of deposits if the investment bank has leveraged its portfolio to the tune of $5billion.

It would be tricky to do, but it could be done and the system would be more stable

Well, I too read this the other day and found it interesting. Even though these banks are part of the same system, there is dissension in the ranks. A few fed bosses occasionally speak out. On Zero Hedge, they posted it as a mutiny in the banana republic.

Some believe in a 2012 scenario that has the lower vibrations shaken out. That the Apocalypse means a great unveiling. Maybe this can be attributed to that? Who knows. It is getting interesting out there.

reply to post by DimensionalDetective


Back to the future. Commercial and investment banks are separate again. Anti-trust breaks up big banks and prevents reintegration. . Now if all the gambling on derivatives can be relegated to the casinos, things will be much better.

reply to post by DimensionalDetective


I think we're finally starting to see open dissension from the Fed districts that represent smaller and regional banks from Fed regions other than NY. You notice Koenig is Kansas Reserve Bank President. He's long been one of the more hawkish voices on the FOMC. Some smaller and even some regional size banks are still healthy and doing business and feel like the big 4 Citi, Wells, JP/chase, and BOA have had enough help and are using that help from the taxpayer to compete against them.

Most of the bailouts both backdoor and formal have been to institutions represented in the NY Fed. Giethner came out of the NY Fed.

reply to post by DimensionalDetective


Call me stupid but I find it odd that a news outlet out of the UK is covering this and I haven't heard squaT from the American sector...

You guys need to understand Hoenig's particular and specific role in today's Fed. He almost always provides a "minority view" that is actually close to something resembling common sense, unlike the flood of garbage that issues forth from Bernanke's whiskered maw. Put another way, Hoenig is like a kind of perpetual "Washington Generals" to Bernanke's "Harlem Globalism-Trotters." He provides the dissenting position so the illusion of debate in the Fed is maintained. He may very well be sincere in his views, but he never gets anwhere and (this being a conspiracy board) we might as well go ahead and entertain the possibility that things are set up that way for a reason?

Under Greenspan there were few (or perhaps even zero) dissenting votes. When Bernanke came in, one of the the ways he said he was going to be different from Greenspan was by encouraging more debate and contrasting opinions. I very much doubt the Bernakster wants these things but for some reason he sees the need to make others think he wants them. Maybe the record of dozens and dozens of unanimous votes in the Fed year after year just seemed a little too blatant for even them to stomach. Although, they've dispensed with so many illusions in recent years, one wonders why even bother to cultivate this one at all? Maybe so they can say, "See, we considered such-and-such option but it was no good" ?

Score - Bernanke; 5,732 Hoenig: 0
[atsimg]http://files.abovetopsecret.com/images/member/86d93a3144d0.jpg[/atsimg]

Originally posted by silent thunder
You guys need to understand Hoenig's particular and specific role in today's Fed. He almost always provides a "minority view" that is actually close to something resembling common sense, unlike the flood of garbage that issues forth from Bernanke's whiskered maw. Put another way, Hoenig is like a kind of perpetual "Washington Generals" to Bernanke's "Harlem Globalism-Trotters." He provides the dissenting position so the illusion of debate in the Fed is maintained. He may very well be sincere in his views, but he never gets anwhere and (this being a conspiracy board) we might as well go ahead and entertain the possibility that things are set up that way for a reason?

Under Greenspan there were few (or perhaps even zero) dissenting votes. When Bernanke came in, one of the the ways he said he was going to be different from Greenspan was by encouraging more debate and contrasting opinions. I very much doubt the Bernakster wants these things but for some reason he sees the need to make others think he wants them. Maybe the record of dozens and dozens of unanimous votes in the Fed year after year just seemed a little too blatant for even them to stomach. Although, they've dispensed with so many illusions in recent years, one wonders why even bother to cultivate this one at all? Maybe so they can say, "See, we considered such-and-such option but it was no good" ?

Score - Bernanke; 5,732 Hoenig: 0
[atsimg]http://files.abovetopsecret.com/images/member/86d93a3144d0.jpg[/atsimg]

THAT hit the nail right on the head!

it's classic Hollywood all the way!

reply to post by silent thunder


I thought that, too - seeing as everything else works on that paradigm. Is anyone here familiar with the Road to Roota conspiracy by Bix Wier and give that any credence or chance for being true? It would be a better outcome to all this, but being a skeptic by nature, it's hard to tell anymore.