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Hey, Hoenig, those oversize banks rig markets for your boss
Fed's Hoenig Says U.S. Should Break Up Largest Financial Firms
By Joshua Zumbrun
Bloomberg News
Wednesday, February 23, 2011
http://www.bloomberg.com/news/2011-02-23/fed-s-hoenig-says-top-financial...
WASHINGTON -- Federal Reserve Bank of Kansas City President Thomas Hoenig said U.S. regulators should avert another crisis by breaking up large financial institutions that pose a threat "to our capitalistic system."
"I am convinced that the existence of too-big-to-fail financial institutions poses the greatest risk to the U.S. economy," Hoenig said today in a speech in Washington. "They must be broken up. We must not allow organizations operating under the safety net to pursue high-risk activities and we cannot let large organizations put our financial system at risk."
Hoenig, the lone dissenter from every Fed meeting in 2010, has argued that the most sweeping overhaul of U.S. financial regulation since the Great Depression won't prevent the largest banks from taking excessive risks and increasing market share. Regulators, including the Fed, are implementing the law.
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Prophecy Resource Spins Off Platinum/Palladium Venture:
World-Class PGM Deposit in Yukon
Company Press Release, January 18, 2011
VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy.
PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding.
Following the transaction:
-- Prophecy will own approximately 90 percent of PCNC.
-- PCNC will consolidate its share capital on a 10 old for one new basis.
-- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp.
-- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings.
Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000.
For the complete announcement, please visit:
http://prophecyresource.com/news_2011_jan18.php
"In my view, it is even worse than before the crisis," Hoenig said at a luncheon for Women in Housing and Finance. "As well-intentioned as the Dodd-Frank Act may be, it will not improve outcomes," he said.
The Dodd-Frank Act, named after its chief sponsors, Massachusetts Rep. Barney Frank and former Connecticut Sen. Chris Dodd, both Democrats, created a resolution authority to unwind the largest financial institutions. It also adopted the Volcker rule, which aims at reducing the odds that banks will make risky investments and put their federally insured deposits at risk.
"Protected institutions must be limited in their risk activities because there is no end to their appetite for risk and no perceived end to the public purse that protects them," Hoenig said.
The Financial Stability Oversight Council, established under the legislation, is working to flesh out the Volcker rule.
"We must break up the largest banks, and could do so by expanding the Volcker rule and significantly narrowing the scope of institutions that are now more powerful and more of a threat to our capitalistic system than prior to the crisis," Hoenig said.
The Kansas City Fed chief cited research from the regional bank indicating that large banks enjoyed savings of 1.6 percentage points on debt with a two-year maturity and more than 3.6 percentage points for seven-year debt.
"In a competitive marketplace, where just a few basis points make a difference, these funding advantages are huge and represent a highly distorting influence within financial markets," he said.
In response to audience questions, Hoenig said the Fed's monetary policy "invites speculation" with its current pledge to keep interest rates low for an "extended period."
Hoenig cited the case of rising farmland values. The Chicago Federal Reserve reported last week that the price of such land rose 12 percent in the fourth quarter of 2010 from a year earlier. In congressional testimony last week, Hoenig said the Kansas City Fed has recorded farmland prices nearly 20 percent above year-earlier levels in Kansas and Nebraska.
The Fed's policy is "encouraging asset buildups," Hoenig said. "My point is that monetary policy isn't just about inflation." It's also "about asset values."
Fed presidents rotate voting on monetary policy and Hoenig, 64, will not vote this year. He joined the Kansas City Fed in 1973 as an economist in banking supervision after earning his doctorate at Iowa State University. Hoenig became president of the Kansas City Fed in 1991.
"The substantial incentives that large organizations have to take on more risk, with the government expected to pick up the losses should they incur, unfailingly lead to undue risks throughout the balance sheet," he said.
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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property
Company Press Release, October 27, 2010
VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:
-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.
-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.
-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.
Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.
"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."
For the company's full press release, please visit:
http://sonaresources.com/_resources/news/SONA_NR19_2010.pdf
