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.
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.