Richard Fisher, president of the Federal Reserve Bank of Dallas, gave a speech at the Mexican stock exchange yesterday. According to this report from Investor’s Business Daily, he sounded an alarm about the the concentration of power held by the country’s five biggest banks: JPMorgan Chase, Bank of America, Citigroup, Wells Farco, and Goldman Sachs. Â The government felt compelled to bail out banks during the financial crisis of 2008 because they were “too big to fail,” and Fisher says the top banks are now even larger, “too bigger to fail.”
But what to do about it?
Downsizing the behemoths over time into institutions that can be prudently managed and regulated across borders is the appropriate policy response,” he said. “Then, creative destruction can work its wonders in the financial sector, just as it does elsewhere in our economy.”
But the analogy Fisher used to bring that downsizing about suggested starving the banks vs. smashing them into pieces.
“Perhaps the financial equivalent of irreversible lap-band or gastric bypass surgery is the only way to treat the pathology of financial obesity, contain the relentless expansion of these banks, and downsize them to manageable proportions.”
Surgery is expensive. Maybe CNBC can launch its own version of The Biggest Loser?