The new president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, made financial headlines Tuesday when he argued for new measures to end the too-big-to-fail problem – including breaking up the largest banks….While I share many of Kashkari’s concerns, his zeal for breaking up the largest banks is premature.
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Kashkari’s Big Plan for the Banks
(Neel Kaskari’s) right that the financial system needs further reform, and it’s good that he’s open to radical proposals….The best way to make banks safer is also the simplest. Require them to finance themselves with more capital and less debt.