WASHINGTON — Kansas City Federal Reserve Bank president Thomas Hoenig yesterday said the Federal Reserve must starting filling the role of financial stability regulator and he laid out his principles for the orderly resolution of large systemically important institutions.
In a speech in Lima, Peru, Hoenig noted that the Fed’s role as policymaker and regulator is twofold.
“We are responding to emerging events, but at the same time we are also challenged with making the changes necessary to protect the financial system from a similar crisis in the future,” he said.
Urgency on all sides is certainly warranted, according to Hoenig. “The time it takes to resolve these issues only increases the cost and further delays the potential for a full global economic recovery,” he said.
Unfortunately, he said, urgency often creates an environment where quick decisions prevail over well-thought-out solutions, and the focus is often on proximate causes instead of underlying problems. “The current crisis, unfortunately, has been no different,” Hoenig said.
— Market News International