U.S. taxpayers will have to bail out the nation’s biggest banks when the next crisis hits unless Congress or the Federal Reserve takes action according to Federal Reserve Bank of Minneapolis President Neel Kashkari. In an interview with FOX Business’ Adam Shapiro Kashkari says there is a 70 percent chance of a crisis this century requiring a taxpayer bailout despite changes in banking regulations implemented after the 2008 financial crisis.
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He also says it’s wrong to believe that ‘Too Big to Fail’ banks pose no threat to the U.S. economy. Kashkari wants to double capital requirements at the biggest banks even though the nation’s top bankers, people like JP Morgan Chase CEO Jamie Dimon (JPM), say those requirements are too high and restrict lending. While Kashkari also supports efforts to separate investment banking from commercial banking operations, that alone won’t protect taxpayers from large financial institutions which pose a systemic risk to the U.S. economy.
Kashkari knows the risks first hand. He was an Assistant Secretary of the Treasury under Henry Paulson during the 2008 financial crisis. He helped draft and oversaw the Troubled Asset Relief Program (TARP) legislation which helped recapitalize US banks during the worst of the financial collapse.