A US Federal Reserve official said yesterday that the US economy still faced “significant weaknesses” and urged policymakers to allow large financial institutions to fail if needed.
“We still have significant weaknesses to work through in the economy in the US and coupled with a rapidly rising level ... [of] debt and enormous moral hazard issues, we have a great deal of work ahead of us,” Kansas City Federal Reserve President Thomas Hoenig said.
Data showed last week that US consumer sentiment had soured early this month on grim job prospects while a larger-than-expected trade deficit had analysts scaling back estimates for third-quarter US growth.
Turning to regulatory issues, Hoenig said that all financial institutions needed to be allowed to fail, no matter their size.
“As we look at reform and the way forward I think the most important think we need to do is to make first of all an accurate assessment of fundamental weaknesses in our financial system and then begin to create better foundations,” he said.
Hoenig was speaking at a central bank event in Abu Dhabi, the capital of the United Arab Emirates.
“Our institutions must be allowed to fail no matter what their size or political influence,” he said.
US regulatory agencies have been embarrassed by flaws in financial oversight that failed to prevent a financial crisis that has triggered a painful recession, cost millions of jobs, and required hundreds of billions of taxpayer bailout money for banks.
The Fed has drawn sharp criticism from some lawmakers for its handling of the financial crisis, particularly its controversial decisions to extend emergency loans to large firms such as insurer AIG, which it did not directly supervise.
“Our reluctance to deal with ‘too big too fail’ provides these largest institutions with important advantages over any competitors who are not seen as important,” Hoenig said.
He also put the spotlight on credit ratings agencies, saying policymakers needed to examine fee structures and incentives, calling into question how the agencies earned fees from the companies they were supposed to rate in an objective manner.
“Even if we put regulatory restrictions on the rating agencies trying to make them behave, incentives overwhelm [the additional safeguards]. Incentives always overwhelm,” he said.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique