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Tuesday, May 24, 2011

Hoenig Made An Important Speech Today

The speech in pdf is here. The white paper behind it is here. I recommend reading both, but a short article about this speech is up at Bloomberg:
The proposal by Hoenig, 64, the longest-serving current Fed policy maker, is in line with his previous calls for the breakup of large financial firms and for tougher bank regulations than officials such as Chairman Ben S. Bernanke have publicly supported. Hoenig, who retires Oct. 1, said last month that international capital requirements are too lax to prevent another U.S. banking crisis.
Asked by an audience member why his views were in the minority at the central bank, Hoenig said that it’s “hard to know” and that his outlook is shaped by his experiences over three decades and multiple banking crises.
Haha! They did not report the rest of his comment, because it was uttered in a mysterious banking dialect.
Ifway eythay ewknay omethingsay aboutway ankingbay, ey'dthay owknay omethingsay aboutway iskray. Iway avehay onay ideaway ywhay urportedpay inancialfay expertsway ouldway inkthay ouyay ouldcay urecay ethay amageday oneday ybay away assivemay ubblebay ybay yingtray otay eatecray away ewnay oneway.
Unfortunately, Hoenig will retire this year. Here's the type of contrarian voice he's been.

It's easy to be against the Fed's policies and still
get paid. If he truly felt that the Fed's policies were
leading us to ruin, and I think he did, he should have resigned in protest. Too many people in power
will go along to get along.

Spork is right. There was a time when people of principle resigned over things like this.

Hoenig knows the powers that be will let him retire, as long as he's not too impolitic. But he can't quite stifle the urge to call them on it.
You know, I had to think about your comments.

You two are entitled to your opinion, but I am glad he was the voice of no. I am glad that voice was represented. This year he doesn't get to vote, but at least last year someone was arguing from experience rather than hope.

As a general rule, I don't think that people should resign from voting positions just because they are outvoted. Following that rule would lead to a total lack of debate.
Why resign? So they can have another yes-man in the echo chamber? For the rest of the country that is the WORST possible thing that could happen - if the Fed thinking/voting was unanimous, it would turn Fed opinions into de facto "knowledge and truth" that become the basis for future education.

The fewer dissenters in public life, the more the remaining dissenters look like crackpots.
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