2011.05.2411:02:00UTC+00Us Should Ban Banks from Engaging in High-Risk Activities Outside Their Core Business - fED s Hoenig

News:

• The US should ban banks from engaging in high-risk activities outside their core business - Hoenig
• Kansas City Fed President Thomas Hoenig said banks covered by the public safety net should be restricted to activities that don't hamper the assessment, monitoring and control of risk, such as making loans and taking deposits
• Dealing, market making, brokerage, and proprietary trading, he said, are not core banking services and should thus be off limits, Hoenig said

• "The consequence of expanding the safety net to an ever-increasing range of activities is to invite a repeat of our most recent crisis," Hoenig told a Global Interdependence Center conference in Philadelphia
• "Within the protection of the safety net, they create risks that are difficult to assess, monitor or control," he said
• "The social costs of additional activities and the associated complexity can greatly exceed the private benefits to an individual bank," said Hoenig, who has been amongst the most vocal Fed officials calling for a break up of banks deemed "too big to fail"