Meet the Fed President Taking on Too Big To Fail

Photograph by David Paul Morris/Bloomberg—Getty

From his seat atop the Fed’s smallest bank, in a region known for fracking, farming and ranching, Neel Kashkari wants to make sure he’s heard well beyond the northern plains.

Since becoming president of the Federal Reserve Bank of Minneapolis this year, the 42-year-old Kashkari has gone on a media blitz, visiting nine major media outlets in two days and creating a Twitter hashtag to promote his view that the biggest U.S. banks should break up.

On Monday, he will host a symposium at his bank in downtown Minneapolis entitled “Ending Too Big To Fail,” giving fierce critics of Wall Street’s behemoths a platform to present their views.

Becoming the Fed’s bad cop is the latest ambitious move in a high-flying career that has taken Kashkari from Goldman Sachs Group Inc, to the Treasury Department at the height of the financial crisis to a run for California governor.

“He’s trying to swing way above the weight of the Minneapolis Fed. He didn’t come from California just to rub elbows with ranchers in Helena,” said Dick Bove, an analyst with Rafferty Capital Markets, referring to the capital of Montana, a state in the Minneapolis Fed’s region.

Kashkari’s critics argue he is using the “too big to fail” issue as a springboard to higher places of authority. He says he’s only working toward prudent financial regulation.

Kashkari’s crusade kicked off with a Feb. 16 speech, in which he compared the aftermath of large bank failures to that of a nuclear reactor meltdown.

He told Reuters a few days later that the symposium is intended to come up with a plan to prevent big banks from receiving big taxpayer bailouts, the way they did in 2008.

That’s a subject he knows intimately.

At Treasury, he ran the Troubled Asset Relief Program, which infused $700 billion into banks, automakers and insurers. The bailout played an important role in stabilizing the financial system during the crisis, but remains controversial.

Kashkari now says “bolder, transformational options” are needed beyond a post-crisis regulation that requires big banks to outline plans to unwind themselves if they fail – known as their “living wills.”

Kashkari launched a social media campaign with the hashtag #EndingTBTF to promote his event and encourage the public to contribute ideas. He has amassed 10,300 followers on Twitter, where his retweets of economic news mix with musings on the superiority of Yuengling beer and photos of his dogs.


Kashkari is not the first Fed official – even within the Minneapolis Fed – to argue that much more should be done to prevent future bailouts of big banks.

Gary Stern, who led the Minneapolis Fed for 24 years, was vocal about the problems created by big banks. Dallas Fed President Richard Fisher has also called for breaking them up.

There are plenty of critics outside the Fed, too. Democratic presidential candidate Bernie Sanders bashes Wall Street at every campaign stop. Even former Citigroup Inc CEO Sandy Weill, who created the so-called “universal” banking model in the 1990s, now says big banks are better off broken up.

Kashkari, however, may have more of a knack for bringing mainstream attention to a subject long the purview of policy wonks and left-leaning politicians.

During and after his time at the Treasury, he was the subject of admiring media profiles – including a photo spread in the Washington Post that showed him splitting logs and building a shed at a cabin in rural California. With his clean-shaven head, thick brows and intense gaze, he made it into People Magazine’s 2008 “Sexiest Man Alive” issue alongside Prince Harry and actor James Franco.

As the Republican challenger to California Governor Jerry Brown in 2014, he spent a week on the streets of Fresno pretending to be homeless and posted a YouTube video about it.

“Up against a hugely popular incumbent, he had to find ways of getting attention,” said Claremont McKenna College politics professor Jack Pitney. He lost to Brown by 20 percentage points.

The son of Indian immigrants, Kashkari earned an MBA from the Wharton School at the University of Pennsylvania and joined Goldman Sachs. In 2006, he followed former Goldman CEO Hank Paulson to the Treasury Department, where Paulson served as secretary under President George W. Bush. Between that stint and his gubernatorial run, he spent a few years at bond-fund giant Pacific Investment Management Co.

As Minneapolis Fed president, Kashkari oversees a bank with $35 billion in assets in a region where oil, timber, farming and ranching are among the important industries. Although none of the U.S. banks considered “too big to fail” are based there, Kashkari said his staff highlighted the issue as a top priority.

Kashkari’s position puts him at odds with peers who have spent years crafting rules to make the financial system safer. In coming weeks, a group of regulators is expected to release the latest information on banks’ “living wills.”


Regional Fed presidents are arguably less influential than their Washington-based colleagues. Most vote on monetary policy once every three years, while Fed governors have a permanent vote on the policy-setting committee.

Fed presidents typically have even less sway on regulatory matters. Their bank supervisory powers are largely limited to carrying out policies set by Washington. When Fed presidents have raised alarms on regulatory issues, they have rarely budged national policy.

Ten current and former regulators, bankers and lobbyists who spoke to Reuters said they believe Kashkari’s “too big to fail” campaign is motivated by his career ambitions. They asked not to be named because they did not want to damage relationships with Kashkari.

In his February interview with Reuters, Kashkari said he had no motive beyond responsible regulation. On Friday, he said critics are trying to distract from the real issues he is addressing at Monday’s event.

“The Wall Street critics can’t argue with me on the substance of too-big-to-fail, so they criticize the messenger,” he told Reuters in an email. “I welcome their criticisms because they are an implicit admission that I am right.”

Kashkari has plenty of supporters, too. They believe his experience in banking, regulation and politics makes him a credible advocate.

“As a moderate, he may be offering some sort of aid and comfort to the notion of breaking up the banks,” said Jim Angel, a professor at Georgetown University’s McDonough School of Business.

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