This is almost un American.....-s-
>>UPDATE: Kansas City Fed's Hoenig Wants Aid For Manufacturers Over Banks 06/28 03:00 PM
(Updates to include comments from other panelists and adds background throughout.)
By Maya Jackson Randall
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Federal Reserve Bank of Kansas City President Thomas Hoenig, along with other panel members at a conference Tuesday, argued that U.S. policies have tended to boost Wall Street at the expense of the nation's manufacturing industry.
They said policymakers need to rebalance the U.S. economy by strongly enforcing key pieces of the Dodd-Frank financial overhaul, such as trading restrictions and capital rules, while also instituting new policies that could help manufacturing flourish. The panelists also agreed that financial policies have enabled certain banks to grow into behemoths that put the economy at risk and they voiced skepticism that the Dodd-Frank Act would be enough to put the economy on the right path.
Hoenig argued that Dodd-Frank doesn't do enough to prevent a future financial crisis because there is still a safety net for the nation's largest financial firms that will encourage risky behavior in the banking industry.
He also said the Volcker rule, a rule that would affect firms such as Goldman Sachs Group Inc. (GS:$128.554,0$-2.1560,-1.65%) because it limits banks' ability to make trades on their own accounts, should be strengthened and implemented "with resolve."
If the government is going to be in the business of giving certain sectors a subsidy, the perk should go to manufacturing, not the financial sector, he added.
"I would rather subsidize the manufacturing sector," Hoenig said at a conference in Washington sponsored by Americans For Financial Reform, Public Citizen, U.S. PIRG and other organizations.
"This really is about the real economy versus Wall Street," said Scott Paul, executive director of the Alliance for American Manufacturing, who argued that the U.S. needs to produce more and consume less.
AFL-CIO Policy Director and Special Counsel Damon Silvers, another panelist, noted that while he doesn't agree with Hoenig on monetary policy, they do share some views about ways financial regulations should be reworked. He said more needs to be done to address banks' balance sheets and ongoing woes in the housing market.
Hoenig noted that manufacturing used to be much more robust in Missouri.
"To see manufacturing leave our part of the country has been particularly troubling," he said.
In response to a question, Hoenig criticized banks' argument against new capital requirements. It's "nonsense" that banks are lobbying against new capital rules, he said. Panelists argued that more stringent capital standards will not hurt banks' ability to lend to consumers and businesses.
Hoenig also said the Glass-Steagall Act, which separated investment and commercial banking activities, needs to be brought back.
"You need to go further. You have to remove more of the subsidy," he said, arguing that without additional policy changes "we're doomed to repeat" the recent financial crisis. New supervision will be undermined and capital standards will eventually be lowered, he predicted. He also argued that the government would still bail out faltering banks even under the new Dodd-Frank regime.
"What we've done with Dodd-Frank is not sufficient," he said.
He also said that low interest rates over a sustained period of time could create the next crisis. Hoenig added that the country needs "strong leadership" to bring manufacturing back.
"The countries that make things are wealthy," he said.
-By Maya Jackson Randall, Dow Jones Newswires; 202 862 6687, maya.jackson- randall@dowjones.com |
