Tags: kashkari | banks | fed | economy

Fed's Kashkari: Politics Have Nothing to Do With Curbing Big Banks

Image: Fed's Kashkari: Politics Have Nothing to Do With Curbing Big Banks
Minneapolis Fed President Neel Kashkari (Minneapolis Fed Photo)

Wednesday, 17 Feb 2016 05:17 PM


The newest Federal Reserve policymaker dismissed concerns that his call for radical action to rein in "too big to fail" banks was a partisan move, and instead said it highlighted the U.S. central bank's independence from politics.

Minneapolis Fed President Neel Kashkari, a Republican and former Treasury official under the Bush and Obama administrations, said on Tuesday existing rules to protect taxpayers and the economy from a bank failure fall short, and he urged Congress to consider breaking up massive banks.

The call for action seven years after the worst of the financial crisis touched a nerve among bankers and on the combative presidential election campaign, where both Democrats and Republicans have hammered Wall Street greed and criticized regulations as having fallen short.

"I don't see this as a partisan issue," Kashkari said in an interview on Wednesday.

"I do think there are people on both sides of the aisle who care about this issue and think we should take stronger action," Kashkari, a former candidate for California governor who took the Minneapolis job last month, told Reuters. "It wasn't a political statement. It was a statement about economic risks."

Kashkari acknowledged he had not consulted broadly with members of Congress or with his colleagues at the Fed, arguing it was appropriate to go public with his views before getting feedback. Fed Chair Janet Yellen and others at the central bank have backed the 2010 so-called Dodd-Frank reform legislation as having gone a long way to protect the economy from another financial crisis.

Bernie Sanders, a Democratic senator and presidential candidate, said on Tuesday he was "delighted" with Kashkari's stance. Asked about this on Wednesday, Kashkari said: "I've never met Senator Sanders and I don't know him and I've never spoken to him. This is not about politics."

Besides Wall Street, the Fed itself has been criticized by Sanders and others running for president for its perceived policy secrecy and too-cozy relationship with banks.

"If we can demonstrate to the American people that there is a diversity of views within the Federal Reserve system, and people are outspoken, what better way to demonstrate that we are not political or beholden to the (White House) or any political party," Kashkari said.

"I think this shows more independence among the Federal Reserve."


© 2017 Thomson/Reuters. All rights reserved.

 
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The newest Federal Reserve policymaker dismissed concerns that his call for radical action to rein in too big to fail banks was a partisan move, and instead said it highlighted the U.S. central bank's independence from politics.
kashkari, banks, fed, economy
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2016-17-17
Wednesday, 17 Feb 2016 05:17 PM
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