Time To Cross Donald Kohn Out Too

Time To Cross Donald Kohn Out Too

First, Summers steps away; Second, Geithner politely declines; and now – just as his odds of becoming the next Fed Head begin to rise, Donald Kohn drops the following headline bomb-shells at a Brookings’ event this morning

  • KOHN: BAIL-IN NEEDED TO PROTECT FINANCIAL SYSTEM FROM TOO BIG TO FAIL FIRMS
  • KOHN: VERY EASY MONETARY POLICY CAN CREATE DANGEROUS RISKS

That should be enough to effectively remove himself from the running… It seems we are back to the lowest common denominator Fed-head – so much for American exceptionalism again.

More headlines (via Reuters):

  • KOHN: GREATER FINANCIAL TRANSPARENCY NEEDED TO ENSURE STABILITY
  • KOHN COMMENTS ON PRINCIPLES OF PROTECTING FINANCIAL SYSTEMS IN GENERAL
  • KOHN: US IN EXPERIMENTAL STAGE OF REGULATING FINANCIAL RISKS
  • KOHN: US REVIEWING INDICATORS OF FINANCIAL RISKS FOR POTENTIAL DEEPER DIVES
  • KOHN: DON’T EXPECT TOO MUCH FROM FINANCIAL SYSTEM OVERSIGHT
  • KOHN: FINANCIAL OVERSIGHT WON’T PREVENT MAJOR CRISES, RATHER BUILD SYSTEM RESILIENCE

Ian Talley at the Wall Street Journal notes some other – ‘less-than-uber-dovish’-comments (which make far too much sense for a Fed Head) from Kohn’s talk at the Brookings Institute today:

Very easy monetary policy often builds imbalances that may become so large that can’t be countered by regulation,”

Problems can arise when one policy [monetary or financial regulation] is leaning so hard in one direction, the other can’t compensate, can’t achieve its objectives. And in these extreme kinds of circumstances, each policy may need to pay more attention to the objectives of the other’s.”

“We can see in the United Kingdom, in my role on the financial policy committee in the U.K., how useful it is to have an autonomous group, an autonomous voice, that can say to the monetary authorities, or the governmental authorities, you’re pushing so far in this direction, we’ve used our regulatory tools, but we think you are creating instabilities.”

So Kohn is definitley NOT a deregulator as Summers was perceived (rightly) to be – but his skeptical view of the Fed’s bombast is hardly gonna to please the powers that be

It would seem this clip sums up the demand for the ‘most powerful job in the world’

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