Comments on Dodd-Frank

Pam Martens quotes some witnesses at last week's House hearings on Dodd-Frank.

Thomas Hoenig, former President of the Federal Reserve Bank of Kansas City and now Vice Chair of the FDIC, told the Committee that the biggest banks are “woefully undercapitalized” and that we have a “very vulnerable financial system.”

“The largest eight U.S. global systemically important financial institutions in tandem hold $10 trillion of assets under GAAP accounting, or the equivalent of two-thirds of U.S. GDP, and $16 trillion of assets when including the gross fair value of derivatives, which is the equivalent of 100 percent of GDP.” 


Richard Fisher, President of the Federal Reserve Bank of Dallas, said “I don’t think we have prevented taxpayer bailouts by Dodd-Frank” and added that the legislation “enmeshes us in hyper bureaucracy.” 

Jeffrey Lacker, President of the Federal Reserve Bank of Richmond,  "Given widespread expectations of support for financially distressed institutions in orderly liquidations, regulators will likely feel forced to provide support simply to avoid the turbulence of disappointing expectations. We appear to have replicated the two mutually reinforcing expectations that define ‘too big to fail.’ ” 

What do you think? Will Dodd-Frank do the job? Wouldn't it make more sense to reinstate Glass-Steagall?