Fed’s Fisher Urges Bank Breakup Amid Too-Big-to-Fail ‘Injustice’

Federal Reserve Bank of Dallas President Richard Fisher said an implicit government guarantee for the biggest U.S. banks is an “injustice” that prompts them to take excessive risks and that they should be allowed to fail.

The largest financial firms should be restructured so each of their units “is subject to a speedy bankruptcy process,” and creditors should be notified their investments won’t be guaranteed by the government, Fisher said in testimony prepared for a House Financial Services Committee hearing in Washington tomorrow on the risk of taxpayer-funded bailouts for banks.