Fed’s Neel Kashkari Says Banks Are ‘Still Too Big to Fail’
Mr. Kashkari’s remarks caused a stir in Washington. Such views have become relatively common at both ends of the political spectrum — providing fuel for the presidential campaigns of Senator Bernie Sanders, Democrat of Vermont, and Donald Trump, a Republican — but Mr. Kashkari is a moderate Republican and a former employee of Goldman Sachs.
.. Mr. Kashkari said the cost of large crises underscored the importance of minimizing risk. “It’s not simply the cost of the bailout,” he said. “It’s the economic damage that’s inflicted across society.”
.. Alternatively, the government could limit risk-taking by increasing the share of funding banks must raise in the form of capital rather than borrowed money. Mr. Kashkari compared this to the safeguards imposed on nuclear power plants, where failure is regarded as unacceptable. Anat R. Admati, a Stanford finance professor, is a leading proponent of this approach.