FORT WORTH, Texas, May 11 (Reuters) - Banks in the Lone Star State have been outperforming those in other parts of the United States for years, Dallas Federal Reserve Bank President Richard Fisher, a leading critic of the nation’s biggest banks, said on Friday.
The comments come a day after JPMorgan, the second-biggest U.S. bank, revealed a $2 billion trading loss, which could unleash a new round of criticism against large U.S. banks and their trading practices.
Fisher has called for the break up of the five largest U.S. banks, including JPMorgan, saying their size makes them a threat to the stability of the financial system.
Fisher, known for trumpeting the merits of the Texas economy, used an appearance at a Texas Bankers Association meeting to lavish praise on his home-state banks, calling them “the nation’s best-run.”
In 2009, when the nation was really from a financial crisis, U.S. banks as a whole lost $11.5 billion; Texas banks earned $1.4 billion, he said.
One of the most widely used measures of credit quality at banks is still called the “Texas ratio,” a name that dates from the late 1980s when Texas banks were among the worst in the nation. The higher the ratio, the worse the bank’s credit.
The measure should be renamed the “anywhere but Texas ratio,” Fisher said, noting that now less than 1 percent of Texas banks had a ratio of over 100 last year, compared to 4.6 nationwide, and 24 percent in Georgia.
Fisher did not address the nation’s economic outlook or monetary policy in the speech.