Former Kansas City Fed chairman Thomas Hoenig Monday writes another strong endorsement of Glass-Steagall, under the headline "No More Welfare for Banks." Saying he has a "proposal to strengthen the US financial system by simplifying its structure and making its more accountable," Hoenig calls for a "Glass-Steagall for today."
Hoenig directly takes on his peers, identifying and refuting the two biggest arguments against G-S: that it would not have prevented the collapse because it was "mortgage lending" which caused it; and that G-S is against free-market ideals and would put the US at a disadvantage in a globalized economy. "If you or I want to speculate on the market, we must risk our own wealth," Hoenig says, however, "banks can readily cover its position using insured deposits or by borrowing from the Federal Reserve," even "doubling down" on a bad bet, which is unfair. The repeal of Glass-Steagall allowed this to happen, and "we have yet to correct this error. It is time we did."
Since his departure form the Fed, Hoenig has become a director of the FDIC, beginning in April 2012. His plan, "Restructuring the Banking System to Improve Safety and Soundness" is posted at the FDIC website.