Jerome Powell Quotes

Bailing out every bank that fails makes the system riskier, not safer.

Limiting the destructive risk-taking by large financial firms and banks which are 'too big to fail' is needed.

Investment banking has, in recent years, resembled a casino, and the massive scale of gambling losses has dragged down traditional business and retail lending activities as banks try to rebuild their balance sheets. This was one aspect of modern financial liberalisation that had dire consequences.

It is no wonder that bank capital is regulated. When borrowing and lending is profitable, it is tempting for banks to scale up their operations and to borrow and lend too much in relation to their capital, in effect reducing the effectiveness of the potential capital cushion.

As we try to make the financial system safer, we must inevitably confront the problem of moral hazard.

Today, even small entities that trade complex instruments or are granted sufficient leverage can threaten the global financial system.

At the heart of banking is a suicidal strategy. Banks take money from the public or each other on call, skim it for their own reward and then lock the rest up in volatile, insecure and illiquid loans that at times they cannot redeem without public aid.

If nobody can sell mortgage-backed securities based on trillions of dollars of unpayable instruments, there's a lot less risk in the overall system.

The financial system is drifting back to business as usual a bit to quickly …. We are starting to see risky behavior of the sort that people were scared of after the crises

We have institutions that have been allowed to become too big to fail because we had all kinds of flaws in our financial infrastructure, in the whole way over-the-counter derivatives work.

What we have to find is the right level of regulation of our financial system so that it has the incentive to invest in things, but at the same time, it is sufficiently regulated so it can't get in the kind of trouble that we have seen in the past and we have seen recently.

I don't want to create a too-big-to-fail player.

Proprietary trading does not belong in banks with FDIC insurance.

One of the big problems we had during the financial crisis was the intermingling of banks and holding companies and complex securities.

For my own part, I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the S.I.V.’s — I didn’t see any of that coming until it happened.

We talk about institutions that are too big to fail - I think the story is as much about people who think they are too big to fail.

American business would be run better today if there was more alignment between CEOs' interest and the company. For example, would the financial crisis of 2008 have occurred if the CEO of Lehman and Morgan Stanley and Goldman and Citibank had to take a very small percentage of every mortgage-backed security... or every loan they made?

Many of us like to think of financial economics as a science, but complex events like the financial crisis suggest that this conceit may be more wishful thinking than reality.

For market discipline to constrain risk effectively, financial institutions must be allowed to fail. Under optimal financial regulatory and financial system infrastructures, such a failure would not threaten the overall system.

The 2008 financial crisis is usually attributed to vampire squid greed. There was certainly a lot of that. But it was also just as likely to have been caused by the chaos of process created by those big, sexy bank mergers when, in the name of 'economies of scale,' critical members of the trust and responsibility chain were cavalierly eliminated.

Bank failures are caused by depositors who don't deposit enough money to cover losses due to mismanagement.

If we are really serious about preventing another crisis like the 2008 meltdown, we should simply ban complex financial instruments unless they can be unambiguously shown to benefit society in the long run.

One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be.

The market, as we're all painfully aware in the aftermath of the banking crisis, can be an idiot. It has no perception of right or wrong, or even sensible or insane. It sees profit.

Leverage is great when it works, and when it doesn't work, it creates a lot of issues. So I think if you limit the amount of leverage that people can borrow, or that banks can borrow, I think you'll find that you'll have a lot less issues going forward.