Federal Reserve Bank of Minneapolis President Neel Kashkari today recommended a hefty increase in capital requirements for the country’s biggest financial institutions, a de facto call for breaking up the big banks, the Wall Street Journal reported. The recommendations are part of a 50-page report that comes after a nearly yearlong effort by Kashkari to explore ways to end the problem of “too big to fail” banks, which could leave taxpayers on the hook if the financial system were to come under threat again. Kashkari said that if his “Minneapolis Plan” is implemented, “We will have fewer mega banks, and there will be far less concentration in the banking system….If there are any [too big to fail] banks left, they will be so well-capitalized that their risk of failure will truly have been minimized.” The consequences of the report, which is being sent to policymakers and to Congress, are unclear. President-elect Donald Trump stirred up anti-Wall Street sentiment but has also called for dismantling the 2010 Dodd-Frank regulatory-overhaul law that imposed tougher rules for the financial system. Kashkari’s plan calls for banks with more than $250 billion in assets to hold common equity equivalent to 23.5 percent of risk-weighted assets. The equivalent leverage ratio would be 15 percent.
