Summers Criticizes Minneapolis Fed President's 'Too Big to Fail' Push
April 06 2016 - 9:30PM
Dow Jones News
ST. LOUIS—Former Treasury Secretary Lawrence Summers on
Wednesday sharply criticized the "style and tone" of Federal
Reserve Bank of Minneapolis President Neel Kashkari's recent push
to address whether taxpayers may have to rescue the biggest U.S.
banks in the future.
Mr. Kashkari, a senior Treasury official during the financial
crisis who became president of the Minneapolis Fed in January, said
in a February speech that postcrisis financial reforms didn't go
far enough to prevent future government bailouts and floated the
idea of breaking up the biggest banks. Mr. Kashkari on Monday
hosted a high-profile symposium on "Ending Too Big To Fail" in
Minneapolis.
"I thought President Kashkari's first speech on the topic was
one of the two or three most blatantly political things...that I've
seen come from a prominent Federal Reserve official in the last 15"
years, Mr. Summers, a former candidate for Fed chairman, told
reporters Wednesday before delivering a lecture at the St. Louis
Fed. "I did not think the style and tone and degree of
collaboration with others was the kind of thing one could expect
from the Fed."
Mr. Summers, a Harvard University economist who served as
Treasury secretary under President Bill Clinton, said, "There is no
question that Dodd-Frank is a place to start, not a place to
finish, in achieving financial stability." But he added that he
"would far prefer an inquiry that stayed a little further from
sloganeering."
Minneapolis Fed spokesman David Wargin said in an email: "This
is not about politics but about addressing a major issue facing us
today. We would welcome Dr. Summers' participation in our upcoming
symposium to share with the public his analysis of why [too big to
fail] is no longer a problem.‎"
Mr. Kashkari, a Republican candidate for California governor in
2014, has said that "if I had any aspiration to run for office
again, this is not what I would be doing." He also said that "Wall
Street critics and the lobbyists are reduced to trying to criticize
the process or criticize my intentions because they can't argue
with me on the substance."
St. Louis Fed President James Bullard attended Monday's
conference in Minneapolis and was supportive of Mr. Kashkari's
recent work, noting on Wednesday that it has been more than five
years since the Dodd-Frank financial reform law was enacted.
"I don't think we should just automatically say, well, we passed
a law and therefore everything's going to work out well in the
future," Mr. Bullard told reporters. "I think it's probably a good
moment to reflect on what the state of affairs is, so I applaud
Neel Kashkari for taking on this project."
Write to Ben Leubsdorf at ben.leubsdorf@wsj.com
(END) Dow Jones Newswires
April 06, 2016 21:15 ET (01:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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