‘Too Big to Fail’ View Hurts Small Banks, Fed Official Says

August 24, 2010  |  

(New York Times) — Thomas M. Hoenig, president of the Federal Reserve Bank of Kansas City, warned on Monday that landmark financial reforms may not end market perceptions that taxpayers will rescue the largest banks, and he cautioned against speculative investments in housing. Mr. Hoenig, testifying at a field hearing of the House Subcommittee on Oversight and Investigations, said larger banks perceived as “too big to fail” have a lower cost of capital, putting smaller banks at a competitive disadvantage and threatening their business model.

Read More…

Trending on MadameNoire

Comment Disclaimer: Comments that contain profane or derogatory language, video links or exceed 200 words will require approval by a moderator before appearing in the comment section. XOXO-MN