Trolling the Fed

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Neel Kashkari has wasted little time in promoting his personal brand as the new president of the Minneapolis Fed.

Kashkari has clearly learned the lessons from his recent political failure – after his unsuccessful run for governor of California in 2014 was marred by accusations that he fuelled crony financial capitalism when he oversaw the Treasury’s $700 billion Troubled Asset Relief Program during the crisis. 

In his first few weeks in office, rather than assessing the Fed’s proprietary data on macro-prudential risks, consulting with colleagues about bank capital levels, or pouring over the avalanche of post-crisis regulation, Kashkari launched a radical and very public campaign to end too-big-to-fail.

He has called for large banks to be turned into public utilities and demanded they hold punitive levels of capital, aligning himself with Wall Street arch-nemesis and Democratic presidential candidate Bernie Sanders.

It’s the monetary equivalent of trolling. After all, he is now arguing that Dodd-Frank is not worth the paper it’s written on, the Federal Deposit Insurance Corp doesn’t know how orderly liquidation works in practice, and that the hundreds of billions of dollars lavished on new bail-in regimes has been a waste.

In effect, he has labelled his colleagues chicken – because he reckons they won’t exercise resolution plans in a crisis – and unsecured creditors in financials thoroughly naïve. 

As one of the few serving monetary officials posting on Twitter, Kashkari has been busy retweeting praise as if he was on the campaign trail.

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He might well be right, and his arguments might deserve serious consideration. But the speed and manner in which he has launched his very public, media-savvy campaign has the whiff of populist politicking, which calls into question their technocrat merits.