There ariseth a little cloud out of Minneapolis, smaller than the hand of a central banker, but worrying nevertheless. Neel Kashkari, newly appointed president of the Federal Reserve Bank of Minneapolis, wants to break up the big banks. Kashkari has taken to introducing himself with an attention-grabbing, “I’m the guy who bailed out the banks,” More precisely, he graduated from Goldman Sachs to the Treasury Department thanks to an appointment by then-President George W. Bush. His job, working with another Goldman alum, Treasury Secretary Hank Paulson: to administer the Troubled Asset Relief Program (TARP) and bail out large financial institutions that were on the brink of bringing down the international financial system. Like Frank Sinatra, regrets he has a few, most important among them that he did not succeed in eliminating the threat posed by banks deemed too big to fail.
This Goldman Sachs alumnus agrees with Socialist presidential wannabee Bernie Sanders, the new hero of the privileged youths who populate our pricier campuses, that the biggest banks must be broken up. Sanders said last week that when (no “if”s allowed to presidential candidates) he is president he will order the Treasury Secretary to give the biggest banks one year in which to break themselves up and restructure the bits of their businesses. Kashkari presumably would have the Federal Reserve Board use the procedures available to it – a bit more cumbersome than the one Sanders prefers – to accomplish the same objective. The twain have indeed met: The banker from Wall Street who met his wife in posh Lake Tahoe, and the Socialist from Vermont who honeymooned in the Soviet Union are as one on bank policy.
