Skip to main content

Man who led bank bailouts of 2008 is appointed president of Minneapolis Fed

  • Author:
  • Updated:
    Original:

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.

Next Up

Screen Shot 2022-12-03 at 4.35.18 PM

Watch: New London-Spicer wins 3A championship on incredible walk-off TD

New London-Spicer defeated the unbeaten Dilworth-Glyndon-Felton in remarkable circumstances.

MoorheadMurderSuspect

Suspect in woman's killing in Moorhead is arrested

James Kollie Jr. was arrested Friday evening.

Jennifer Carnahan

Former chair Jennifer Carnahan sues Minnesota GOP, which is suing her back

Carnahan stepped down under a cloud of controversy in August 2021.

Minneapolis Fire Department

One injured after leaping from burning vacant building in Minneapolis

Authorities say the building is known to be used by squatters.

ambulance

Head-on crash leaves two drivers dead in southeastern Minnesota

The crash happened in Houston County just before 4 p.m. Friday.

ConellHarris

Charges: Armed man made death threats at Minneapolis LGBTQ bar

The man allegedly used derogatory terms while threatening to kill someone.

image

FDA pulls last COVID-19 monoclonal antibody treatment as new variants rise

A therapy used to treat more than 11,000 Minnesotans is no longer authorized amid a surge in the latest COVID-19 variants.

Austin Robert LeClaire

Charges: Plymouth man shot girlfriend in head after birthday party

The 23-year-old victim is in critical condition as of Friday.

image

State announces $2.5M in grants for child care providers

Child care providers in roughly a dozen communities will receive funds to help grow the supply of affordable, quality child care.

image

Probe of Golden Valley police uncovers racism, alleged misconduct

One officer was terminated for alleged racist comments and violations of state law.

blowing snow

Blowing snow Friday in Minnesota; will it snow next week?

Winds could gust up to 50 mph Friday afternoon and night.

Deer hunting blaze orange

To combat CWD, late-season deer hunting announced for 9 areas of MN

The special hunts will be held between Dec. 16 and 18.

Related

It's called 'The Minneapolis Plan' and it's meant to prevent bank bailouts

The Minneapolis Fed pitches a recipe to keep banks from getting 'too big to fail'

Feds close Minnesota bank

The FDIC shutdown Patriot Bank in Forest Lake Friday. First Resource Bank in Savage agreed to take over the assets and deposits from the failed Minnesota bank. There have been seven U.S. bank failures in 2012. Patriot Bank is the first to fail in Minnesota this year.

Ecolab appoints Handley to president and chief operating officer

Thomas Handley is being promoted to replace Erik Fyrwald who left the company in April, the Business Journal reports. Handley joined the St. Paul-based maker of cleaning, sanitation, pest elimination and maintenance products in 2003. He was most recently the president of its Global Food & Beverage division and Asia Pacific Latin America businesses.