Federal Reserve Bank of Kansas City President Thomas Hoenig said the financial sector needs to step up and take a lead role in the current credit crisis in order to help restore stability.
Speaking on the topic of banking regulation at the Institute of International Bankers in Washington, D.C. on Monday, Hoenig said the U.S. Treasury's rescue plan is "daunting," and suggested regulatory agencies don't overreact in responding to the turmoil.
He said the new rules must be simple and enforceable, and that he favours a rules-based set of regulations as opposed to a principles-based system.
Hoenig, who is not a voter on the Fed's policy-setting board, said the bank supervisory structure is not the cause of the crisis and warned against the rise of a "financial oligarchy."
By Stephen Huebl and edited by Sarah Sussman
©CEP News Ltd. 2008