Federal Reserve Bank of Minneapolis President Neel Kashkari said Congress hasn’t gone far enough to protect the U.S. economy from potential crises and unveiled plans to study options for regulators that include breaking up the nation’s largest financial institutions.
“The biggest banks are still too big to fail and continue to pose a significant risk to our economy,” said Kashkari, who managed the U.S. Treasury’s $700 billion rescue of banks in the 2008 crisis known as the Troubled Asset Relief Program.
Kashkari, 42, said the Minneapolis Fed will hold a series of events and collect public and financial-industry input before making proposals by the end of this year on how to address the issue. He said options to consider include breaking up big banks, forcing large banks to hold so much capital they resemble “public utilities” and taxing leverage in the financial system to alleviate risks.
Kashkari, who took over at the Minneapolis Fed on Jan. 1 following a failed run for governor of California in 2014, compared the risk posed by big banks to that of a nuclear power plant in explaining why the government would probably have to bail out banks again in the event of another systemic crisis.