The Fed’s Hoenig calls for the recognition of reality:
Big banks like Bank of America Corp and Citigroup Inc should be reclassified as government-sponsored entities and have their activities restricted, a senior Fed official said on Tuesday. The 2008 bank bailouts at the height of the financial crisis and other implicit guarantees effectively make the largest U.S. banks government-guaranteed enterprises, like mortgage finance companies Fannie Mae and Freddie Mac, said Kansas City Fed President Thomas Hoenig.
“That’s what they are,” Hoenig said at the National Association of Attorneys General 2011 conference. He said these lenders should be restricted to commercial banking activities, advocating a policy that existed for decades barring banks from engaging in investment banking activities.
“You’re a public utility, for crying out loud,” he said.
While I would prefer to see the big banks broken up, their assets marked to market, and their bankrupt elements closed down, Hoenig’s plan is a reasonable compromise. Of course, there is little chance of it happening, since limiting the government-guaranteed banks to commercial banking activities would eliminate their ability to continue their financial rapine.
As for BOA CEO Moynihan’s claim that customers want the big banks to continue combining commercial and investment activities, I think he has badly misread the public mood. Most Americans would just as soon see the bastard bankster’s head on a stake.