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Tom Hoenig, the dissident voice of the Federal Reserve who pushed for a tougher inflation stance at the central bank, comes up for his confirmation hearing as Vice Chairman of the Federal Deposit Insurance Corporation (FDIC) on Thursday, November 17, 2011, in the Senate Banking Committee at 10 A.M. This appointment could be construed as the latest attempt by the White House in its attempts to stack the Fed with inflation doves.

Unfortunately, this is a common tactic of the White House: Quiet a dissident voice with the promise of another appointment. The last part of Harvard Law Professor Elizabeth Warren’s tenure as overseer of the Troubled Asset Relief Program (TARP) was punctuated with pulled punches about the administration’s handling of the $700 billion bailout. Ms. Warren was named the effective head of the newly created Consumer Financial Protection Bureau by the President without Senate confirmation. Now she is running to represent Massachusetts in the U.S. Senate presumably with White House support.

At a time when the House Financial Services Committee wants to put the salaries of some of the biggest recipients of Federal bailouts, Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), on government pay scales, Mr. Hoenig is earning over $20,000 a month in retirement as the President of the Kansas City Fed because he was exempted from federal pay scales. The Fed has figuratively printed money to pay generous salaries to the Presidents of its branch banks who count as their alumni Mr. Geithner and Mr. Hoenig. Yet, Mr. Geithner and Mr. Hoenig were Presidents of regional Federal Reserve banks while the Federal Reserve passed out over $17 trillion in bailout loans of cash and securities to a group of about 20 investment banks and brokerage houses called primary dealers.

Examples are the too big to fail banks of BAC, C, JPM, WFC, MS, and GS. Some of these same primary dealers set Mr. Geithner’s salary. (That was not a misprint. These banks got over $17,000,000,000,000 in bailout loans from the Federal Reserve, which is over 20 times more than the $700,000,000,000 initially authorized under the Troubled Asset Relief Program bailout.) The least these investment banks could do was pad Mr. Geithner’s retirement fund.

It is argued by some that Mr. Hoenig will help end too big to fail (TBTF) at the FDIC. This seems unlikely. First, the Federal Reserve is the supervisor of the bank holding companies, some of which are the TBTF banks. If Mr. Hoenig wanted to end TBTF, he wasn’t very successful as one of the most powerful regulators of these institutions. The FDIC is generally the primary supervisor of community banks and has limited jurisdiction over the TBTF banks.

Moreover, Mr. Hoenig has never publicly questioned the FDIC’s hundreds of billions in bailout loan guarantees to primarily Wall Street’s elite. Unfortunately, the FDIC program known as the Temporary Liquidity Guarantee Program (TLGP) has made hundreds of billions of dollars, if not trillions of dollars in loan guarantees. Yet, the FDIC has not disclosed the recipients of these guarantees. That allows the FDIC to hide losses from this bailout program. For example, no news outlet has reported on the losses to the TLGP from the failure of Integra Bank, which received $50 million in loan guarantees, because the FDIC has not distributed a list of these bailout recipients.

The FDIC is now writing checks to make those Integra Bank bondholders with taxpayer guarantees whole. This program could be sitting on billions in losses, but taxpayers would never know. If Mr. Hoenig wants to prove himself as an opponent of too big to fail, he should say publicly—and back those words with actions—that he believes that the FDIC should disclose the names of all the recipients of TLGP bailout loan guarantees since the program began in October 2008.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: FDIC Nominee Needs To Prove Himself As An Opponent Of Too Big To Fail