The Capitalism and Freedom in the Twenty-First Century Podcast Inside Financial Regulation: Thomas Hoenig on the Fed, FDIC, and Banking Reform | Hoover Institution
Jul 3, 2025
Join Thomas Hoenig, former Vice Chair of the FDIC and President of the Kansas City Fed, as he shares invaluable insights from his extensive career in banking and economics. He discusses the fallout from the global financial crisis and examines the moral hazard linked to deposit insurance after recent bank failures. Hoenig critiques quantitative easing and its unintended consequences, while also addressing current challenges faced by the Federal Reserve amidst rising national debt. His expert analysis makes for a compelling conversation on financial regulation.
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Early Banking Exposure
- Thomas Hoenig's early exposure to banking came from accompanying his father, a small businessman, to the bank.
- His career blended monetary policy and banking supervision, informing his later regulatory roles.
Monetary Policy Breeds Bank Crises
- Excessive monetary easing sets banks up for risk by encouraging them to lend on inflated collateral values.
- Raising rates then precipitates asset value drops, revealing insufficient bank capital buffers and creating crises.
Impact of Bailout Decisions
- Bailing out some banks but not others entrenches "too big to fail" and harms financial stability.
- The decision not to save Lehman Brothers later in the crisis created inconsistent expectations and market instability.
