(Updates with comments in ninth paragraph).
April 12 (Bloomberg)--Federal Reserve Bank of Kansas City President Thomas Hoenig said requirements of international capital are too lax to avoid another U.S. banking crisis.The standards established by the Basel Committee on banking supervision required "too little capital", Hoenig said today in a speech in Charlotte, North Carolina. "Who will not prevent the next crisis and will not adequately prepare the institutions for the next crisis."The rules established by the Basel Committee and approved by the Group of 20 leaders last year need lenders more than triple the capital of the highest quality they hold to cushion against losses in 2019. The regulation may cut the performance of the equity capital of European banks, on average, by 4 percentage points and US banks by 3 percentage points, according to estimates by consultants McKinsey & Co..In the years preceding the financial crisis, "routinely denied" capital ratios, Hoenig said, adding that he believed that such erosion can reappear.Large commercial banks should be dismantled with their activities restricted to low business risk, Hoenig, maker of the Central Bank of the U.S. longer, said in a roundtable sponsored by the National Association of Attorneys General. "We really need to think about redefining the scope of the financial business of commercial banks,"Hoenig said, expressing a point of view has already been mentioned." "This means break, essentially".Officials of the BailoutsSome end Fed, including Hoenig, Philadelphia Fed President Charles Plosser and Richmond Fed Jeffrey Lacker, say the Dodd-Frank legislation adopted last year does end necessarily rescues because she gives the discretion of regulators to provide these rescues. MacKinnon asked a bankruptcy law that would set rules for how a large financial company should be bulging downwards.The Dodd-Frank Act gave the Fed and other powers of regulators to take and wind down failing institutions, the mandate that the Central Bank search for evidence of emerging financial stability risks and the largest U.S. banks required annual stress tests.The largest banks have become essentially Government-sponsored enterprises or "public utility" because of the implied, said Federal safety net Hoenig .dodd-Frank will fail to resolve the problem, because it does adequately restrict the risks, he said. ' Great risks ' "At the moment, is the American taxpayer," which supports institutions, Hoenig said. "We must be very careful, that our citizens, our audience, we put at risk," he said. "We need to understand the safety net, the motivations of the safety net, or will allow us to repeat the mistakes of the past."Because the larger banks operate with a safety net and are deemed "too big to fail", they have a competitive advantage over community banks in the nation, Hoenig said. "" They are terribly disadvantaged of too big to fail ", he said. "I think that they are at risk."View of the Hoenig has been picked up by Mark Zandi, Chief Economist at Analytics Inc. of Moody, West Chester, Pennsylvania, on the same training. Zandi warned that too much regulation can hurt risk-taking by small banks. "Excessive regulation will not be our small institutions,"he says. "I consider the fact we have 8 000 banks as a force of our system and we must preserve that.". Any regulatory change should be done through the prism of what it means for small institutions. "Hoenig is retiring on 1 October, after a 20 year career as leader of the Kansas City Fed. He has repeatedly called for the Central Bank to tighten monetary policy to avoid the bubbles of price inflation accelerates and assets of developing countries. He voted eight times directly last year against the record of monetary stimulus headed by President s., Ben Bernanke, tying the record of the former Governor Henry Wallich in 1980 for most of the differing views in a single year.-Publishers: James L. Tyson, Paul Badertscher
To contact the reporters on this story: Steve Matthews at Columbia, at smatthews@bloomberg.net South Carolina
To contact the editor responsible for this story: Christopher Wellisz to the cwellisz@bloomberg.net
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