Fed’s Neel Kashkari says banks are “Still too big to fail”
During the 2008 financial crisis, Neel Kashkari worked tirelessly to save the nation’s largest banks. As a senior Treasury Department official in the George W. Bush and Obama administrations, he helped those banks grow larger than ever.
On Tuesday, he said it was time to think about breaking them up.
“I believe the biggest banks are still too big to fail and continue to pose a significant, ongoing risk to our economy,” Mr. Kashkari said at the Brookings Institution, delivering his first public speech as the new president of the Federal Reserve Bank of Minneapolis.
He described the threat of another crisis that might force the government to bail out large banks, as it did in 2008, as a rare instance of a clear and preventable problem.
“The question is whether we as a country have the courage to actually take action now,” he said.
Mr. Kashkari’s remarks caused a stir in Washington. Such views have become relatively common at both ends of the political spectrum — providing fuel for the presidential campaigns of Senator Bernie Sanders, Democrat of Vermont, and Donald Trump, a Republican — but Mr. Kashkari is a moderate Republican and a former employee of Goldman Sachs.
“There are lines in your speech I can imagine a Bernie Sanders or Elizabeth Warren saying,” David Wessel, a former economics editor at The Wall Street Journal who moderated the Brookings event, told Mr. Kashkari during a panel discussion after the speech. “It’s not what one expects from a Goldman Sachs Republican.”
Mr. Kashkari, who joined the Minneapolis Fed in January after a postcrisis stint at the investment management firm Pimco and an unsuccessful run for governor of California, responded that he was calling things as he saw them. He said his views on financial regulation were shaped by the crisis, convincing him that strong, simple safeguards are the most sensible.
“If I’m not willing to stand up and share my concerns, then I wouldn’t be doing my job,” he said.
As interim Assistant Secretary of the Treasury for Financial Stability from October 2008 to May 2009, he oversaw the Troubled Asset Relief Program(TARP) that was a major component of the U.S. government’s response to the financial crisis of 2007–08. A Republican, he ran for Governor of California in the 2014 election, but failed to unseat incumbent Jerry Brown.
Born and raised in Ohio and educated at the University of Illinois at Urbana–Champaign, Kashkari worked initially as an aerospace engineer. After attending business school at the Wharton School of the University of Pennsylvania, he became an investment banker, covering the information technology security sector for Goldman Sachs.
When Henry Paulson, the former head of Goldman, was appointed Secretary of the Treasury in 2006, he brought Kashkari on as an aide. Kashkari was eventually named Assistant Secretary of the Treasury for International Economics and Development. At Treasury, he played a number of roles in the response to the financial crisis and the subprime mortgage crisis that preceded it, most notably administering TARP.
this is your typical DC banker..pedigree at GS..then moved into the government departments..the savior of the banks!
“During the 2008 financial crisis, Neel Kashkari worked tirelessly to save the nation’s largest banks.”
no bank is to big to fail..and nobody should be to big to not go to jail..