The Federal Reserve Bank of Minneapolis has a new president – one with a very storied background.
The Minneapolis Fed announced on Tuesday it is appointing Neel Kashkari as its new president and CEO, succeeding Narayana Kocherlakota in January.
Kashkari, 42, ran an unsuccessful campaign last year as the GOP candidate in the gubernatorial race for California, losing out to incumbent Jerry Brown, who won 59 percent of votes.
The Wall Street Journal notes although an aerospace engineer by trade, he joined Goldman Sachs in 2006 before making his most telling contribution in the financial sphere, as part of the Bush administration's response to the 2008 financial crisis.
He ran the government's $700 billion Troubled Asset Relief Program – which "stabilized the financial system" by bailing out the country's beleaguered banks – and managed to turn a $12 billion profit for the taxpayer in doing so.
The Los Angeles Times reports he received mixed reviews for his six-month stint as the first TARP administrator, with some watchdogs complaining he was "overly secretive and deferential to the big banks."
But he told MPR News "big banks did not get any special deal," saying they needed to "put medicine into the economy quickly," and it was best to do that starting with the bigger institutions."
"We believe that Neel has the right combination of skills: policymaking, management and leadership, banking and financial markets, and communications," MayKao Hang, the soon-to-be chairwoman of the Minneapolis Fed board of directors, said in the announcement. "These skills make him uniquely qualified to lead the Minneapolis Fed and serve as a valued participant on the Federal Open Market Committee."
What does the Minneapolis Fed do?
The LA Times notes the Minneapolis Fed is one of the 12 regional banks that make up the Federal Reserve System, and its president is a "rotating" member of the Federal Open Market Committee that sets the U.S. Fed's monetary policy.
This means the Minneapolis Fed plays a national role as the U.S. Fed strives to achieve its aims of low inflation and high employment, as well as having a say when decisions on economic stimulus measures needed during times of crisis.
More pertinently now, it plays a role in what happens to interest rates – which the Fed is expected to increase in the coming months, which in turn has a knock-on effect on the amount interest we pay on mortgages, loans, and what returns we get on savings.
On the local level, MPR News reports the Fed supervises and examines commercial banks and holding companies across the Upper Midwest, stretching from Montana to Michigan.
The news organization notes Kashkari will get his first chance to influence national policy in 2017, when he gets a seat at the table as part of the member rotation on the Fed's Open Market Committee (FOMC).
Neil Dutta, an economist at Renaissance Macro, told Business Insider he considers the Minneapolis Fed to have a more aggressive tone to fiscal policy compared to the consensus, and should Kashkari adopt that tone when he joins the FOMC he could potentially argue to steeper interest rate rises.