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Outgoing FDIC official shares blunt view of ‘Too Big to Fail’ and bank regulation

Joe Mont | March 30, 2018

As part of his farewell tour, Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation, has candidly addressed the effect of prudential standards and regulatory initiatives on big bank bailouts.

Hoenig, after six years with the FDIC, will be stepping down from the post. But he is not going quietly. In a March 28 speech delivered to the Peterson Institute for International Economics in Washington, D.C., he discussed the idea of “Finding the Right Balance” when it comes to the push-pull of regulation and de-regulation versus prudential standard-setting.

He began by offering a history lesson, one that goes back to what might possibly be the start of the “Too Big to Fail” regulatory conundrum.

Over Fourth of July weekend in 1982, he was the officer in charge of lending at the Federal Reserve Bank of Kansas City. The week began with a phone call from a panicked banker with a...

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