The Fed’s “Mr. No”

The New York Times profiles the Fed’s contrarian, Thomas Hoenig who is the president of the Kansas City Fed.

This is an odd time to profile Hoenig since he rotates off the FOMC at the end of the year. Tomorrow’s meeting will be his last.

This caught my eye:

By keeping interest rates too low for too long, in his view, the Fed contributed to the dot-com bubble that burst in 2001 and the even bigger housing bubble that popped in 2007.

The Nasdaq had its highest close on March 10, 2000 at 5,048.62. The index closed the year at 2,470.52, meaning the tech bubble had already popped by 51% before 2001 even began.

Tuesday’s Fed vote will be Mr. Hoenig’s last, because the presidents of the Fed’s regional banks, other than New York, share votes under a rotation system. Mr. Hoenig does not have a vote next year, and he must retire after he turns 65 in September.

As for his future, Mr. Hoenig is certain that he will not follow other Fed veterans who have gone to work on Wall Street. “I can tell you one thing,” he said. “I’ll never work for a too-big-to-fail bank.”

Um…you already do.

Posted by on December 13th, 2010 at 6:41 pm


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