This is Why I F%ing Love Jeffrey Lacker: JL Takes On Obama for Regulatory "Missteps"
We'll get to Lacker's speech a little bit later (day job and all) but for now, this is all win all the way and further proof why Richmond Fed's fearless leader kicks the most ass of the entire Fed system. Just sayin.
Obama going down wrong reform road: Fed's Lacker (MarketWatch):
A central tenet of the Obama administration's Wall Street reform plan will only make matters worse, said Jeffrey Lacker, the president of the Richmond Federal Reserve Bank on Monday.
Lacker took aim at the White House request for a new law to establish procedures for the government to wind down a big financial services firm outside of the bankruptcy code.
Lacker said this new authority would allow the government to protect creditors from loss and as a result "severely limit the benefit from reforming the resolution process."
"A widespread belief that public funds will soften the blow to private creditors would weaken market discipline and further complicate the task of regulators," Lacker said
Lacker said research at the Richmond Fed has concluded that 45% of financial sector liabilities had some type of implicit or explicit government backing in 1999. It seems only logical that this safety net has risen over the past decade, he said.
"I have a hard time believing that we really need a publicly funding financial institution support system covering nearly half of the liabilities in our credit markets," Lacker said.
Lacker said he realized the transition to a "narrower" safety net would be quite difficult politically.
Because actions speak louder than words, Washington will have to demonstrate their tough commitment by imposing sharp losses on creditors.
That may be why the resolution authority proposal is so popular, he said.
Go, JL, go!!
As always, the fun is in the comments:
"Well I'll be darn, some thoughts that make sense.......almost forgot what it felt like to read something that wasn't foolish."
"Jeffrey Lacker seems to be about the only official in D. C. who has not been overtaken with Keynesian theology. The rest of the Fed believe that if debt got us into this problem, massive debt can get us out. The administration view is to take from prudent investors and give to reckless, gambling investment bankers."
"I concur immensely with this article.
To put it simply - Failure is an essential ingredient to learning for future success. If we do not have humble fear of loss, how can we have prudent courageous "risk-taking" achievement???????"
"what mr lacker says makes sense, regarding the use of public money causing riskier behavior -
if this advice had been applied sooner, and more evenly, it would probably be better received...."
"This comment did not conform to the MarketWatch Community Guidelines and was removed. " [hmmm, maybe that was Janet trying to talk some smack?]
Bwhahahahaha, WINWINWINWINWIN and yes, MW community, he IS the only one who gets it. Welcome to JDA's world, now when are we going to stage a coup against Janet Yellen?!