At the Brookings Institution on Tuesday, Neel Kashkari, a senior Treasury Department official in the Bush and Obama administrations, said that he believes “the biggest banks are still too big to fail and continue to pose a significant, ongoing risk to our economy.”

“The question is whether we as a country have the courage to actually take action now,” Kashkari, who was recently appointed president of the Federal Reserve Bank of Minneapolis, said on Tuesday.

A moderate Republican and former Goldman Sachs employee who was the head of the $700 billion Troubled Asset Relief Program (more widely known as the bank bailouts) in 2008, Kashkari’s remarks reflected the populist mood influencing this election cycle:

Given the enormous costs that would be associated with another financial crisis and the lack of certainty about whether these new tools would be effective in dealing with one, I believe we must seriously consider bolder, transformational options. Some other Federal Reserve policymakers have noted the potential benefits to considering more transformational measures. I believe we must begin this work now and give serious consideration to a range of options, including the following:

  • Breaking up large banks into smaller, less connected, less important entities.
  • Turning large banks into public utilities by forcing them to hold so much capital that they virtually can’t fail (with regulation akin to that of a nuclear power plant).
  • Taxing leverage throughout the financial system to reduce systemic risks wherever they lie.

His proposals, needless to say, came as a surprise. From the New York Times:

“There are lines in your speech I can imagine a Bernie Sanders or Elizabeth Warren saying,” David Wessel, a former economics editor at The Wall Street Journal who moderated the Brookings event, told Mr. Kashkari during a panel discussion after the speech. “It’s not what one expects from a Goldman Sachs Republican.”

Mr. Kashkari, who joined the Minneapolis Fed in January after a postcrisis stint at the investment management firm Pimco and an unsuccessful run for governor of California, responded that he was calling things as he saw them. He said his views on financial regulation were shaped by the crisis, convincing him that strong, simple safeguards are the most sensible.

“If I’m not willing to stand up and share my concerns, then I wouldn’t be doing my job,” he said.

Bernie Sanders released a statement on Tuesday saying that he was “delighted” by Kashkari’s speech, which also criticized the “endless objections” the banking industry’s lobbyists have brought against proposals for stricter regulation. “We need to move before we as a society have forgotten the lessons of ’08,” Kashkari said.

Of course, if Kashkari and his boss, Treasury Secretary and former Goldman Sachs CEO Hank Paulson, had stood up to their finance friends’ endless objections in 2008 perhaps our situation would not be quite so precarious now.

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