A top-ranking Federal Reserve official responded directly to JPMorgan Chase CEO Jamie Dimon’s criticisms of bank regulation, writing in an unusually direct rebuke that the banker’s claims are “demonstrably false.”
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, used the publishing site Medium to issue a rebuttal to Dimon’s investor letter this week that called on bank regulators to “open the rulebook” and said the problem of too-big-to-fail banks is over.
“I strongly disagree,” Kashkari wrote in his post, illustrated with an image of a man in a suit crossing his fingers behind his back. Specifically, Kashkari argued that Dimon was wrong to argue that banks are no longer too big to fail and wrong to say that capital levels at banks are too high.
Responding directly to one banker is an unusual step for a member of the central bank, but Kashkari has demonstrated throughout his short tenure as a central banker that he is willing to push the envelope.
Alone among Fed members, Kashkari explains his votes in Fed monetary policy meetings on Medium. He also has ruffled feathers in issuing opinions on matters usually outside Fed officials’ purview, as when he suggested in March that the educational system needs reform.
A former banker at Goldman Sachs and manager of the 2008 TARP bailouts, Kashkari also has been aggressive in promoting higher capital requirements. In November, he rolled out a major proposal to massively increase capital levels at big banks, effectively forcing them to either downsize or become less risky. While that proposal cannot go anywhere without Congress taking it up, it drew notice from the banking industry.
