Folks in the banking industry know the phrase so well they just use the letters TBTF.
Too Big To Fail.
The top banking exec in Minnesota went to Wall Street Wednesday to tout a plan for preventing banks from getting so big the country would rather bail them out than watch them fail.
This guy knows about TBTF
When the country's biggest banks hit a financial crisis a decade ago, a government bailout was justified by explanations that if the banks went under it would be disastrous for the U.S. economy. So a $700 billion bailout was hatched to rescue banks considered too big to fail.
Neel Kashkari was in the thick of that bailout. He ran the Troubled Assets Relief Program for the Treasury Department in the George W. Bush administration.
Now Kashkari is president of the Federal Reserve Bank of Minneapolis. He told The Economic Club of New York the country can't afford another one of those bailouts and said his "Minneapolis Plan" will get the biggest banks to break themselves up into smaller pieces.
What would the plan do?
Under the Minneapolis Plan big banks – ones worth $250 billion or more – would have to keep more money around to cover unexpected losses.
For banks the Treasury Department says are especially important to the economy, that could be up to 38 percent of their assets. Reuters says that doubles the equity capital those banks have to have now.
Kashkari says banks would not want to do that, so to avoid the requirement they would break themselves up.
In his words: "We believe the threat of these massive increases in capital will provide strong incentives for the largest banks to restructure themselves..." (You can read his speech here or watch it on YouTube.)
The plan would also put new taxes on the biggest "shadow banks," which The Economist explains are investment funds that act like banks but don't have the same regulations. And it would roll back regulations on small banks.
Will it happen?
People who would have said "No" during the Obama administration are instead saying "Who knows?" with Donald Trump poised to move to the White House.
Reuters notes Trump has been a critic of Wall Street and said during the campaign he would get rid of the 2010 law that set up today's banking regulations.
“Everyone is waiting and watching to see what he meant,” former Minnesota Gov. Tim Pawlenty told the New York Times Wednesday.