“If You Are Too Big To Fail, You’re Too Big”: Richard Fisher

Excerpts:
Nearly four years after U.S. taxpayers bailed out Wall Street, the debate over how to deal with America's too big to fail banks rages on.


"Five banks have 52% of all the deposits in the industry and they are now bigger than they were before we got into the crisis," explains Fisher. That's compared to 1970 when the top five banks maintained just 17% of all deposits. "We've had this huge amount of legislation called Dodd-Frank — thousands of pages, hundreds of sections — and it is has not solved the too big to fail problem."


In fact, the combined assets of the top 10 banks equal half of America's total GDP, according to the Dallas Fed's annual report.


"There is an inherent injustice in being too big to fail because you are implicitly getting a subsidy from the government," says Fisher. "They don't have to be these giant depository institutions that are underwritten by the taxpayer."


"Dodd-Frank has made it very difficult from a regulatory burden standpoint for community and regional banks," Fisher says. "These are the people who lend to small businesses [and] small businesses create the majority of jobs in America."


He believes Dodd-Frank "penalizes community and regional banks" and even "interferes with the proper connection of monetary policy to the economy as a whole."


If the problem is not solved, he believes another crisis will hit again, at some point in the future.


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