Fed's Fisher: Why Can't the US Be
More Like Texas?
Monday, September 30, 2013 09:00 AM
By:
John Morgan
Richard
Fisher, outspoken president of the Federal Reserve Bank of Dallas, believes
government and mega banks both should be whittled down to size, and that the
Texas model of encouraging small business growth is what the rest of America
should get behind.
In a wide-ranging interview with Euromoney, Fisher kept his mantle as a tireless advocate of taking a scalpel to the investment activities of "too big to fail" banks.
Don't count Fisher among fans of the Dodd-Frank Act. "They did what they could in the crucible of a crisis, but over 9,000 pages of regulation are too much. And now there is more concentrated power in fewer hands than before the crisis," he maintained.
Editor’s Note: Retired Americans Slammed by Obama’s Redistribution Plans
Fisher's solution is not so much to break up the mega banks like Bank of America and JPMorgan Chase as it is to put a firewall between their banking activities and their investment activities.
According to his thinking, federal deposit insurance and access to the Fed discount window should only be available to the commercial banking arms of the big banks, while any transaction involving any other segment of their businesses, including their investment arms, "be accompanied with a clear agreement between counterparties that it will never, ever be bailed out by government or the taxpayers."
But would this scenario play out in Washington? "The large financial companies and their proxies are spending millions of dollars to buy congressmen and congresswomen and protect their interests," he told Euromoney. "You can quote me on that. We will see how that plays out."
Small businesses should be the engine of U.S. growth, but they are being thwarted by lack of direction from Washington, and the fact there has been no federal budget for five years, Fisher explained.
Neighboring Mexico has a sounder fiscal policy than the United States, according to Fisher. "Mexico has a balanced-budget rule. Its percentage of debt to GDP is minimal. They get things done. And they have an independent central bank that is truly independent."
In a speech in early September in Dallas, Fisher said Republican and Democratic lawmakers have "sold our children — and our grandchildren — down the river," according to The Wall Street Journal.
Fisher said the central bank has done everything it can to revive the U.S. economy, but members of Congress on both sides of the aisle have failed to finish the job.
He also does not spare the White House from his barbs. In a separate speech last week to the Independent Bankers Association of Texas, Fisher said the White House has "terribly mishandled" the process of picking the next Fed chair, and instead allowed the central bank to be politicized in the very public process of finding a successor to Fed head Ben Bernanke, Reuters reported.
In a wide-ranging interview with Euromoney, Fisher kept his mantle as a tireless advocate of taking a scalpel to the investment activities of "too big to fail" banks.
Don't count Fisher among fans of the Dodd-Frank Act. "They did what they could in the crucible of a crisis, but over 9,000 pages of regulation are too much. And now there is more concentrated power in fewer hands than before the crisis," he maintained.
Editor’s Note: Retired Americans Slammed by Obama’s Redistribution Plans
Fisher's solution is not so much to break up the mega banks like Bank of America and JPMorgan Chase as it is to put a firewall between their banking activities and their investment activities.
According to his thinking, federal deposit insurance and access to the Fed discount window should only be available to the commercial banking arms of the big banks, while any transaction involving any other segment of their businesses, including their investment arms, "be accompanied with a clear agreement between counterparties that it will never, ever be bailed out by government or the taxpayers."
But would this scenario play out in Washington? "The large financial companies and their proxies are spending millions of dollars to buy congressmen and congresswomen and protect their interests," he told Euromoney. "You can quote me on that. We will see how that plays out."
Small businesses should be the engine of U.S. growth, but they are being thwarted by lack of direction from Washington, and the fact there has been no federal budget for five years, Fisher explained.
Neighboring Mexico has a sounder fiscal policy than the United States, according to Fisher. "Mexico has a balanced-budget rule. Its percentage of debt to GDP is minimal. They get things done. And they have an independent central bank that is truly independent."
In a speech in early September in Dallas, Fisher said Republican and Democratic lawmakers have "sold our children — and our grandchildren — down the river," according to The Wall Street Journal.
Fisher said the central bank has done everything it can to revive the U.S. economy, but members of Congress on both sides of the aisle have failed to finish the job.
He also does not spare the White House from his barbs. In a separate speech last week to the Independent Bankers Association of Texas, Fisher said the White House has "terribly mishandled" the process of picking the next Fed chair, and instead allowed the central bank to be politicized in the very public process of finding a successor to Fed head Ben Bernanke, Reuters reported.
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