Rationalizing the Structure
Simplifying complex financial companies by breaking them up along business lines will end subsidized risk taking, resulting in greater competition, accountability, and stability to support the long-run growth of the U.S. economy. Risk taking is a vital part of the financial system. Let's let it thrive by moving broker-dealer and shadow-banking activities outside of the safety net and its subsidy so they can be subject to the forces of the market, and limit commercial banks to the core intermediation activities the safety net was intended to protect, activities essential to a well-functioning economy. More details Speeches, Testimony, Statements and Other Material
Capital standards must be simplified and strengthened to contain the impulse for excessive leverage and to provide a more effective backstop to absorb unexpected losses. Using a straightforward ratio of tangible equity capital to total assets is a more conservative, more credible method of assessing capital adequacy because it counts as the only capital only that can truly absorb losses. Speeches, Testimony, Statements and Other Material
We must reestablish a more rigorous examination program for the largest banks and bank holding companies to best understand the risk profile of both individual firms and financial markets. Speeches, Testimony, Statements and Other Material
Statement by FDIC Vice Chairman Hoenig on the Proposed Supplemental Leverage Ratio
"The supplemental leverage ratio should be adopted as proposed. The leverage ratio represents a minimum acceptable level of capital against total tangible assets and is the appropriate measure to judge the capital soundness of an institution. The discussion of unconventional monetary policy on excess reserves and its effect on the composition and risks affecting the balance sheet is a separate discussion."