WASHINGTON - The following are excerpts from a Fox Business News interview with Dallas Federal Reserve Bank Pres. Richard Fisher, to air in its entirety at 4 p.m. ET:
On quantitative easing:
"Right now, the economy is improving. It's not a fast trajectory. Economic growth is slower than we'd like, but it is positive and gaining momentum. We wish it were more robust. It is getting better, it is healing. It's off the operating table, it's walking, but it's walking slowly. In those conditions, we don't need any more monetary morphine. We will not support further quantitative easing under these circumstances. A lot of money is lying on the sidelines, lying fallow. Banks have a $1.6 trillion in deposits on the 12 Federal Reserve bank books. We're only paying .25 percent. I know they want to make more than that, they want to loan it out. Corporations have over $2 trillion dollars in cash sitting on the sidelines. Non-depository institutions have copious amounts of cash. Here's my question: why would you put more out there when what we've already put out there is already is not being used to lubricate the economy, create more jobs, drive American prosperity, and create greater wealth for all of our people?"
On his call to break up the big banks in the U.S. per the Dallas Fed's 2011 annual report:
"We've reached a radical conclusion, which is our best guess, and this is purely the Federal Reserve Bank of Dallas, in the end we're going to have to break up these institutions. It's un-American to have that much concentration and it inhibits the functioning of monetary policy in terms of the money we print through this accommodation and try to get out to the system. And our society is based if you fail, you fail. And government shouldn't be subsidizing institutions, A, that have done great damage; B, that may present systemic risks going forward. Our taxpayers and depositors shouldn't be hostage to institutions that are too big to fail. We saw this happen before and I certainly don't want to be put in that position again."
On what role the Central Bank would play in preventing the subsidization of big banks:
"They get the subsidization, in part, because of their size and their cost of funding is much lower. So we are members. The chairman of the Fed is a member of the Financial Oversight Committee or Council, what's known as FSOC. So it's a question of effectiveness. And the Fed is hard at work, particularly Governor Dan Tarullo, to try to define the new capital standards, how much capital these banks have to have in their pocket to make sure they don't put themselves into jeopardy again. We are seeing changes there. And he's a real pit bull on this issue. And he's working very hard on this."
On how to break up the banks without increasing the regulations:
"Simplicity is always a virtue. We do have a financial system oversight committee and stability oversight committee. That committee can very clearly state -- and it's up to them to decide where banks and institutions put us at risk."
On whether Dodd-Frank has failed:
"I don't want to be specifically critical about Dodd-Frank. It depends on how they implement it. But I do believe you can break these institutions up. There's a whole industry in this country that is an expert in terms of buying assets, taking companies apart, selling off the pieces. And the sum of the pieces, A, is greater than the whole, and then, secondly, you remove the risk of these behemoths putting the taxpayer as hostage when they get into trouble."
On current fiscal policy:
"What I mean is a rational system that incentivizes risk taking in America and incentivizes people to create jobs for all of our people. And right now, fiscal policy scares job creation away, in my opinion."
On whether the TARP program was a bailout of fiscal malfeasance:
"It's not the job of the central bank to do their work of writing tax laws and controlling spending so that businesses have confidence to take the monetary accommodation we've provided as the central bank. We've printed a lot of money. Money is cheap. We've got gasoline in the tank. Someone has to incent people to step on the accelerator and move the automobile of jobs and prosperity forward, job creation and prosperity forward. That is dependent significantly on what your cost factors are going to be if you're running businesses. A woman or a man who is trying to build something needs to know what -- how they're going to be taxed. Is it a positive tax or a negative tax? What kind of spending is going to take place? And they also need to know what kind of regulatory environment, how much is health care going to cost and all these kind of things. That's a separate issue than how we regulate the banks or these behemoth too big to fail institutions. And our point is, very simply, that we think the only way to effectively deal with this is to make sure they're not too big to fail."
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