Break up the banks, says Minneapolis Fed chief [View all]

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Break up the banks, says Minneapolis Fed chief

Adam Samson in New York - February 16, 2016 6:12 pm


America’s biggest banks pose a potentially “nuclear” threat to the US economy and regulators should consider breaking them up, according to the new head of the Minneapolis Federal Reserve.

Neel Kashkari, who was a key architect of Wall Street’s 2008 bailout, said the largest US lenders remain “too big too fail”. He said in his first public comments since becoming the head of the Minneapolis Fed at the start of the year that efforts to regulate the big banks since the financial crisis had not gone far enough.

A break-up should be on the table, alongside a plan to turn the largest into public utilities by “forcing them to hold so much capital that they virtually can’t fail”, he said. Taxing leverage throughout the financial system to “reduce systemic risks wherever they lie” should be considered as well, he added.

Mr Kashkari said that the largest financial institutions “continue to pose a significant, ongoing risk to our economy”. He unveiled a task force at the Minneapolis Fed designed to examine ways to make the financial system safer.

http://www.ft.com/cms/s/0/9f13e542-d4cd-11e5-8887-98e7feb46f27.html#axzz44xH5arxD