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What's Right in Kashkari's Big Plan for the Biggest U.S. Banks

Bloomberg opinion, as Minneapolis Fed undertakes study of additional measures that might remove some lingering bailout risk from financial markets.

By The Bloomberg Editors | Updated on February 18, 2016

The new president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, has gotten off to a bold start. In a speech this week, he warned that almost eight years after the financial crisis, the largest U.S. banks still pose a grave risk to taxpayers and the broader economy. Dealing with this problem, he said, will require a “transformational restructuring.”

He’s right that the financial system needs further reform, and it’s good that he’s open to radical proposals. But one thing should be clear at the outset: The best way to make banks safer is also the simplest. Require them to finance themselves with more capital and less debt.

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