Tags: financial | crisis

Hoenig: Financial Firms Must Lead on Crisis

Monday, 13 Oct 2008 09:55 AM

Kansas City Federal Reserve Bank President Thomas Hoenig said on Monday that financial firms need to "step up" to help resolve the credit crisis, and warned financial regulators from overreacting.

"I think one of the issues that now has to be addressed, and that is for the financial industry itself to step up and lead through this. I don't think we can do it with just (the) Federal Reserve and the Treasury," Hoenig told the Institute of International Bankers. "We need our 21st Century J.P. Morgans."

"Regulatory agencies across the world also have to fulfill their role in working with the industry — not overreacting, but at the same time pushing us toward solutions," he added.

Rules-based supervisory structures are more effective than ones built on principles, Hoenig said.

"Principles-based solutions usually become vague, they're subject to volumes of regulatory interpretation," he said. Such a structure tends to be stricter in lean times and looser in boom periods, rather than smoothing out extremes, he added.

A challenge for regulators going forward will be to review capital requirements, such as those proposed under so-called Basel bank standards.

"Risk-based capital as we have attempted to build it has become increasingly complex and difficult to understand and has provided too little information to the broad public as to the condition or solvency of institutions," he said.

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Kansas City Federal Reserve Bank President Thomas Hoenig said on Monday that financial firms need to "step up" to help resolve the credit crisis, and warned financial regulators from overreacting."I think one of the issues that now has to be addressed, and that is for the...
financial,crisis
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2008-55-13
Monday, 13 Oct 2008 09:55 AM
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