Today’s must read speech comes from Federal Reserve Bank of Kansas City President Thomas Hoenig, who warns that the nation’s biggest banks are putting the U.S. capitalist society at risk: Do Systemically Important Financial Institutions (SIFIs) Have a Future?

Hoenig is one of the most outspoken Fed members regarding the systemic risk Too Big Too Fail banks have created. He and Dallas Fed President Richard Fisher have suggested a break-up of the TBTF banks.

Hoenig believes that the massive benefits of the FDIC insurance on deposits makes banks almost utilities. He supports the reinstatement of Glass Steagall and the Volcker rule. If banks want to go beyond their core lending activities or any other Wall Street-like speculation, they need to give up that deposit insurance. Otherwise, taxpayers are guaranteeing every speculative bet made by every bank.

The entire speech is filled with insight and commentary not typically heard from sitting Fed members.

Hoenig’s concern is not for the welfare of any specific bank or even the banking system, but rather for the entire capitalist system itself:

“How can one firm of relatively small global significance merit a government bailout? How can a single investment bank on Wall Street bring the world to the brink of financial collapse? How can a single insurance company require billions of dollars of public funds to stay solvent and yet continue to operate as a private institution? How can a relatively small country such as Greece hold Europe financially hostage? These are the questions for which I have found no satisfactory answers. That’s because there are none. It is not acceptable to say that these events occurred because they involved systemically important financial institutions. Because there are no satisfactory answers to these questions, I suggest that the problem with SIFIs is they are fundamentally inconsistent with capitalism . They are inherently destabilizing to global markets and detrimental to world growth. So long as the concept of a SIFI 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’s comments on the decline in competition and accountability in banking are especially noteworthy: