Minnesota Fed Chief plans to end too-big-to-fail banks

Minneapolis Fed President Neel Kashkari on Wednesday released his plan to end too-big-to-fail banks, advocating for “much higher capital levels” for large banks and a tax on leverage for shadow banks.

Kashkari released his four-step plan in comments before the Economic Club of New York.

A former assistant secretary of the Treasury who oversaw the Troubled Asset Relief Program (TARP) that was part of the government’s response to the 2008 financial crisis, Kashkari said that while he supported Congress moving quickly to institute the Dodd-Frank financial reform act in 2010, and that “significant progress” has been made to strengthen the U.S. financial system under the act, the “biggest banks are still” too-big-to fail “and continue to pose a significant, ongoing risk to our economy.”

Many experts agree, he said, that TBTF still exists today “because current plans to address it have not been fully implemented. More importantly, we believe that the current plan, even when fully implemented, will not sufficiently minimize the threat of TBTF.”

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