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Minneapolis Fed offers plan to end ‘too big to fail’

Joe Mont | November 16, 2016

Picking up where the Dodd-Frank Act left off, Federal Reserve Bank of Minneapolis President Neel Kashkari has unveiled a new plan for ending the systemic threats of “too big to fail” financial institutions.

In 2008, TBTF banks were at the center of the financial crisis and among the triggers of the Great Recession. Subsequent regulations and reforms, particularly in the form of higher capital requirements, have indeed strengthened the financial system, he says, but “have only reduced the chance of bailout over the next 100 years from 84 percent to 67 percent.”

In February 2016, Kashkari announced a year-long initiative to explore policy solutions to address the continuing risk presented by TBTF financial institutions. Months of meetings and forums with economists, academics, and policymakers informed the proposal, “designed to reduce the...

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