Neel Kashkari, the newly appointed president of the Minneapolis Federal Reserve, has come out swinging in his first speech as a Fed official.
In a speech delivered at the Brookings Institution on Tuesday, Kashkari called for breaking up the biggest banks in the US.
"I believe we need to complete the important work that my colleagues are doing so that, at a minimum, we are as prepared as we can be to deal with an individual large bank failure," Kashkari said.
He added (emphasis added):
"But given the enormous costs that would be associated with another financial crisis and the lack of certainty about whether these new tools would be effective in dealing with one, I believe we must seriously consider bolder, transformational options. Some other Federal Reserve policymakers have noted the potential benefits to considering more transformational measures. I believe we must begin this work now and give serious consideration to a range of options, including the following:
- Breaking up large banks into smaller, less connected, less important entities.