[BLOOMBERG] The former U.S. Treasury official who led the 2008 bailout program for the nation's biggest banks says in his new role at the Federal Reserve that Congress and regulators should consider breaking them up to protect the financial system from another crisis.If they're "single points of failure," then break them into redundant systems. Teddy Roosevelt had that idea, but I guess the bigger the company the more milk's in the donation udder.
Federal Reserve Bank of Minneapolis President Neel Kashkari, speaking Tuesday in Washington, said his regional Fed bank will study ways to toughen U.S. banking laws to prevent another financial crisis.
Regulators should consider options including breaking up the nation's largest financial institutions, loading them up with "so much capital that they virtually can't fail" and taxing leverage to make the system safer, he said. Tougher oversight will require new legislation, he added.
"The biggest banks are still too big to fail and continue to pose a significant risk to our economy," Kashkari, who managed the U.S. Treasury's $700 billion Troubled Asset Relief Program for rescuing banks in the crisis, said in his remarks. It was his first public speech since joining the Fed on Jan. 1 as its newest policy maker.
While Kashkari's position fits with populist sentiment that has driven the rise of presidential candidates including Democrat Bernie Sanders
...The only openly Socialist member of the U.S. Senate. Sanders was Representative-for-Life from Vermont until moving to the Senate for the rest of his life in 2006, assuming the seat vacated by Jim Jeffords...
, it's at odds with top Fed leaders including Chair Janet Yellen, who isn't calling for dramatic steps such as breaking up large banks. Such changes would also face a steep uphill battle to adoption by the Republican majority in Congress, which wants to roll back parts of the Dodd-Frank financial law passed in 2010, rather than go further as Kashkari proposes.