A Federal Reserve regional president has called for the dismantlement of big banks whose failure could pose serious risk to the global financial system.
Neel Kashkari, who took office as president of the Minneapolis Fed on January 1st and was a top Treasury official during the 2008 financial crisis, said in a speech that “bolder, transformational options” must be considered to reform the banking sector.
“We must acknowledge that the largest banks are still too big to fail,” Kashkari said at the Brooking Institution in Washington, according to his prepared remarks.
And if they fail amid a stressed economic environment, the government “will be forced to bail out failing institutions—as we were.”
Kashkari was one of the architects of the government’s massive bailout of banks and automakers in the 2008 financial
The largest banks “continue to pose a significant, ongoing risk to our economy,” Kashkari said, and the Dodd-Frank Act reforming banking regulation was a step in the right direction but it “did not go far enough.”
