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Ending Too Big To Fail

Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, discussed his ideas for transforming the banking industry
May 16, 2016

Kashkari event

Kashkari event
Photo by Stan Waldhauser.

Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, joined the Heller-Hurwicz Economics Institute on May 16, 2016, for a conversation on financial regulation. The discussion was moderated by John Harwood, Chief Washington Correspondent for CNBC.

Soon after President Kashkari began his appointment in January 2016, he announced a major initiative to develop an actionable plan to end the systemic risks posed by Too Big To Fail (TBTF) financial institutions. As the assistant secretary of the treasury during the 2008 financial crisis, Kashari oversaw the Troubled Assets Relief Program (TARP). Having been an active participant in the bank bail-outs, he wants to ensure this is an intervention that never has to happen again. Through this initiative, the Minneapolis Federal Reserve is analyzing all of the transformational options for eliminating the problem of too big to fail banks and plans to make a policy recommendation at the end of the year.

According to Kashkari, Minneapolis is the perfect place to tackle this issue. The Minneapolis federal reserve bank and the University of Minnesota economics department have been working on this issue for decades. Former President of the Federal Reserve Bank of Minneapolis Gary Stern and current Senior Policy Advisor Ron Feldman highlighted the risks posed by large banks and suggested policy reform back in 2004. Even earlier, economists John Kareken and Neil Wallace pioneered thinking on moral hazard in banking.

Kashkari intentionally announced this initiative in a bold manner to catalyze a national conversation. He encouraged the audience to voice their opinions on this topic through their elected officials and ultimately it will be up to Congress to pass new legislation.

More information on the Ending Too Big To Fail initiative is available on the Minneapolis Federal Reserve website.

View photos from the event.