zerohedge.com / by Tyler Durden / Nov 16, 2016 11:15 AM
In the latest reminder that 7 years after the financial crisis, the US banking system still remains a systemic risk, Minneapolis Fed President Neel Kashkari today released four-step plan to end too-big-to-fail problem. In his speech to the economic club of New York, the former Goldman banker said that while significant progress has been made to strengthen U.S. financial system, biggest banks continue to pose a significant, ongoing risk to our economy.
Under the “Minneapolis Plan,” there would be “fewer mega banks,” community banks would thrive, and mid-sized banks would make up larger share of system.
A summary of the proposed Fed plan argues that large banks already under shareholder pressure to reorganize will face increased pressure to consider breaking themselves up.
- The plan, which will naturally be ignored by the banks themselves and the authorities, is culmination of efforts since February that brought together experts on financial crises and bank regulation, such as former Fed Chairman Ben Bernanke and ex-central bankers Roger Ferguson and Randall Kroszner according to Bloomberg.
- Largest banks “refused to participate” for fear their presence would be viewed as acknowledgment that TBTF problem exists.
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