Fed President Hoenig : Bailouts distort economy, prolong crisis

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Bailouts distort economy, prolong crisis, Fed's Hoenig says
By Rex Nutting
Last update: 9:45 a.m. EDT April 21, 2009
Comments: 35
WASHINGTON (MarketWatch) -- The current federal bailouts of big financial firms is distorting the economy and prolonging the crisis, said Kansas City Fed President Thomas Hoenig in testimony to Congress on Tuesday. The Troubled Asset Relief Program has not restored confidence in the banking system, he said. Banks that are well capitalized should be left alone. Banks that need just a little help should be required to raise more capital. Banks that are not viable should be liquidated, he said. Hoenig spoke at a hearing of the Joint Economic Committee. Nobel Prize-winner Joseph Stiglitz and MIT economist Simon Johnson also testified about the problem of banks that are deemed "too big to fail." End of Story

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