Former Dallas Fed VP Gerald O' Driscol Tells Fox Business Dodd-Frank Doesn't Address Root Causes Of Crisis

Former Dallas Federal Reserve (Fed) Bank Vice President Gerald O'Driscoll spoke with FOX Business Network's (FBN) Liz Claman and David Asman about the release of lending documents and how this will change the relationship with banks. O'Driscoll said this move by the Fed is going to make “the central bank be more transparent, which it should be.” He goes on to say we have not incorporated lessons learned from the financial crisis “into policy or statute” and that “it's shocking the amount of overseas lending that is being done.” Excerpts can be found below, courtesy of Fox Business Network. On whether we have learned from the financial crisis: “The lessons have not been incorporated into policy or statute. The Dodd-Frank bill doesn't address what caused this crisis at all.” On what caused the financial crisis: “Excessive risk taking particularly by the largest banks. The too big to fail institutions are the big problem because no one is willing to do what's necessary to get them to curtail their risk taking so we are just going to set up for the next round.” On concerns that opening the Fed's loan books may stop banks from tapping into discount window again: “It's not going to be the end of the world. The major effect is to have the central bank be more transparent, which it should be. If commercial banks are dissuaded from engaging in the kind of risky activity that throws them into the discount window, good.” On whether banks making risky investments should have access to the Federal Reserve: “No. The number of institutions with access has been widened and I think it should be narrowed back again and also the kinds and amounts of lending. It's shocking the amount of overseas lending that is being done.” On international lending: “All these banks have central banks it's the responsibility of the ECB to lend to European banks and so forth. We can't supervise those banks. We don't know what's going on. We don't know why they need the money. At least with the U.S. banks, the Fed knows why they needed the money and can presumably take action if they should.” On the validity of the argument that U.S. banks would not be able to compete with European banks if the Fed were not open to financial institutions: “No I don't think it ever held water. The Swiss and to some extent the British are tightening up on the banks and the risk taking much more than we are.”