Obama to name Fed dissenter Hoenig as FDIC No. 2

[OhioChick]

Source: AP

Friday, October 21, 2011, 3:07 PM

WASHINGTON -- President Barack Obama is nominating a longtime Federal Reserve official and critic of big banks to be the No. 2 official at the Federal Deposit Insurance Corp.

The White House announced that Thomas Hoenig, who stepped down as president of the Federal Reserve Bank of Kansas City in October, is the president's choice to be vice chairman at the FDIC. His nomination must be confirmed by the Senate.

Hoenig was the most vocal critic of the Fed's $600 billion bond buying program, which ended in June. He also opposed keeping the Fed's key short-term interest rate near zero. Hoenig said such policies risked higher inflation at a later time.

Hoenig has also publicly criticized big banks, saying they pose a danger to the financial system.

Read more: http://www.cleveland.com/business/index.ssf/2011/10/obama_to_name_fed_dissenter_ho.html

[MannyGoldstein]

1. What power does he have as FDIC number 2?

I could be wrong, but it seems like the FDIC is basically an insurance company, it doesn't set meaningful policy.

On the face of it, seems like Hoenig will have less power to make change than before.

[sybylla]

6. IIRC, the FDIC enforces some regulations and sets solvency requirements

It's been 25 years since I worked in the financial field, but that's how it used to be. The FDIC used to have a bit of a watchdog function.

With any luck, that's how it still is, which means someone who's critical of how the big banks are behaving can make demands on those banks, set expectations for behavior at least regarding solvency, and threaten to pull the FDIC rug out from under them if they don't conform.

On the other hand, this could just be a way to get rid of the guy, putting him in a job where he can't get into too much trouble.

[MannyGoldstein]

7. I hope that you're right and they have some power

And that this guy is a good guy.

[jwirr]

10. And in this latest transfer of derivatives into insured accounts at BofA

it is the FDIC that is objecting. Hopefully that will put some teeth in this issue. But I honestly doubt it.

[EC]

2. Good, Obama is finally on the right path.

But he'll never get confirmed. I sure hope the House and Senate close down for recess at Thanksgiving. But somehow I doubt it.

[JDPriestly]

9. I have thought that so many times -- and always been disappointed

when I found out more of the facts.

Obama is a good showman -- but he lacks the courage to do the tough stuff that needs to be done. He just can't bear to disappoint his big-time donors. Disappointing ordinary Americans poses less of a problem for Obama, especially since his announcements are always so covered in tinsel that you can't really see the reality for the glitter.

[SkyDaddy7]

11. Just admit it NOTHING Obama could do...

would satisfy you at all. Seriously, you might as well be open about it...Not like you would be alone here on DU.

[denverbill]

3. 'His nomination must be confirmed by the Senate.'

Which means he will never, ever be confirmed.

[Bozita]

4. !

[Sam Hain]

12. !!

:argh:

[banned from Kos]

5. Funny - Hoenig was one of those "corrupt" regional Fed presidents

He wrote "Too Big Has Failed" in favor of bank break-ups. link -

http://www.kc.frb.org/speechbio/hoenigPDF/Omaha.03.06.09.pdf

Good choice, President Obama.

[Dover]

8. I hope this is indicative of a sea change in economic theory by Obama..n/t

[Honeycombe8]

13. It's about time. Maybe this is the start of a beautiful friendship? nt

[sarcasmo]

14. More hope for a better 2nd term.