Halister News

(Bloomberg) -- Minneapolis Fed Pres. Neel Kashkari, in text of speech Monday, appears to lean away from govt breakup of banks in favor of letting banks restructure themselves to meet new regulatory cap.

• Image of govt analysts “arbitrarily” deciding how to divide trillion-dollar bank into smaller pieces “gives many people concern -- including me,” Kashkari said in text of speech Monday in Minneapolis
  • NOTE: Time of speech, originally scheduled for 11:30am local time, has been pushed back by 45 minutes to 12:15pm local time
• One idea presented at April 4 Minneapolis Fed symposium of experts as way to combat too-big-to-fail problem is to have incentives in place to let banks decide “how to optimally divide themselves to meet a new regulatory cap”
  • There could be $350b “effective” cap on size of banks, and higher capital requirements on banks that exceed that size
• “Given sufficient incentive,” banks should “be able to restructure themselves”
• Link to story earlier Monday
• NOTE: Kashkari, a former Pimco executive and Treasury official who oversaw TARP program, joined Minneapolis Fed in Jan.; he succeeded Narayana Kocherlakota