WASHINGTON (dpa-AFX) - Minneapolis Fed President Neel Kashkari said the nation's biggest banks remain too big to fail and pose significant risk to the economy.
'While significant progress has been made to strengthen our financial system, I believe the [Dodd-Frank] Act did not go far enough,' Kashkari said in a speech at the Brookings Institution. 'I believe the biggest banks are still too big to fail and continue to pose a significant, ongoing risk to our economy.'
Kashkari urged the Congress to consider to solve this problem once and for all.
'Large banks must similarly be able to make mistakes-even very big mistakes-without requiring taxpayer bailouts and without triggering widespread economic damage. That must be our goal,' Kashkari.
Kashkari said Congress must consider breaking up large banks into smaller, less connected, less important entities. They should also turn large banks into public utilities by forcing them to hold so much capital that they virtually can't fail.
'Taxing leverage throughout the financial system to reduce systemic risks wherever they lie,' Kashkari said.
Kashkari said the Federal Reserve Bank of Minneapolis is launching a major initiative to consider transformational options and develop an actionable plan to end too-big-to-fail banks.
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