Senior Federal Reserve official slams financial reform

Churning out more of the same policies that brought us to this crisis in the first place is not the answer. Any sane person has to agree that the financial system needed to be rescued to prevent an even worse crisis but strengthening an elite few while leaving nearly 1,000 banks in trouble is not progress. It’s no wonder Goldman and the other mega banks think they own the US. They do. The financial reform only papers over the problem, setting the stage for the next problem which will be even more costly. More from the Fed’s Richard Fisher via the Huffington Post.

This is most definitely not a market outcome.

“Based on these considerations, coupled with studies suggesting severe limits to economies of scale in banking, it seems that mostly as a result of public policy — and not the competitive marketplace — ever larger banks have come to dominate the financial landscape. And, absent fundamental reform, they will continue to do so. As a result of public policy, big banks have become indestructible. And as a result of public policy, the industrial organization of banking is slanted toward bigness.”

This is an unfair, nontransparent, and dangerous taxpayer subsidy at work.

“Big banks that took on high risks and generated unsustainable losses received a public benefit: TBTF [“too big to fail”] support. As a result, more conservative banks were denied the market share that would have been theirs if mismanaged big banks had been allowed to go out of business. In essence, conservative banks faced publicly backed competition.”

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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