Isaac Cohen -- HispanicBusiness
The president of the Federal Reserve Bank of Dallas Richard Fisher has spoken again about the need to regulate too big to fail megabanks before it is too late.
In
remarks delivered in Washington D.C. on Jan. 16 Fisher recalled that he and the research staff of the Dallas Federal Reserve have dealt with this critical issue since July 2009. The focus on these megabanks is based on the concern that as a result of their privileged status because they are too big to fail they interfere with the transmission of monetary policy and inhibit the advancement of economic prosperity.
Furthermore thought of as islands of safety in a sea of risk they became the enablers of a financial tsunami. They were the epicenter of the 2007-09 financial crisis he added.
Fisher defines these megabanks as financial firms whose owners managers and customers believe themselves to be exempt from the processes of bankruptcy and creative destruction.
The financial reform approved by the U.S. Congress after the financial crisis according to Fisher has not done enough to corral these megabanks and this legislation has made things worse.
One indicator cited by Fisher to illustrate this point has to do with banking concentration in the U.S. In 2012 12 banks accounted for only 0.2 percent of the approximately 5600 commercial banks but these behemoths held almost 70 percent of industry assets.
Fishers remarks can be read on the
Federal Reserve Bank of Dallas website.
Isaac Cohen is an international analyst and consultant a commentator on economic and financial issues for CNN en Espaol TV and radio and a former director UNECLAC Washington Office.
