Obama nominates big bank critic for FDIC vice chair
President Obama nominated Thomas Hoenig, former chief of Federal Reserve Bank of Kansas City and long-time critic of the largest banks, as vice chairman of the Federal Deposit Insurance Corp. If the Senate approves Hoenig, he would serve on the FDIC board until December 2015. In March, Hoenig said he would retire from the Kansas City Fed, where he served as president for 20 years. He left Oct. 1. Leaving freed him up to sharpen his opinions of the largest financial institutions that he said are directly responsible for the financial crisis in 2008. Those institutions have enjoyed unfair preferential treatment since, he said. "So long as the concept of a (systemically important financial institution) exists, and there are institutions so powerful and considered so important that they require special support and different rules, the future of capitalism is at risk and our market economy is in peril," Hoenig said in a June speech at New York University. Since 2008, there have been 398 bank failures, of which 326 were smaller community banks. Jaret Seiberg, an analyst at Washington think tank MF Global, said the nomination is a positive for these smaller institutions. Hoenig has been an advocate for smaller banks and frequently spoke about the cost of regulatory burdens on them, Seiberg added. "It is hard to find a government official who spoke out more forcefully for breaking up the biggest banks than Hoenig during his tenure as Kansas City Federal Reserve president," Seiberg said. "He believes too-big-to-fail is a serious problem that only can be fixed by making the biggest banks smaller. As FDIC vice chairman, he will have an even bigger platform for this message." Write to Jon Prior. Follow him on Twitter @jonaprior.