Since he was named the President of the Minneapolis Federal Reserve in early 2016, Neel Kashkari has burst onto the central banking scene with all the subtlety of a Fox and Friends-fueled Donald Trump tweet.
Kashkari immediately declared that he and the Minneapolis Fed would finally craft a solution to Too Big to Fail before eventually proposing that the banks hold a quarter of their assets in capital and be treated like everyone’s favorite public utility; nuclear power plants. He started an education initiative that has led to some uh, spirited discussions with teachers skeptical of Neel’s expertise and intentions. This year, he dissented from monetary policy votes andblogged about it on Medium. He wrote an essay to call out Jamie Dimon … and posted it on Medium.
What nobody has been able or willing to say for sure, though, is the purpose of this shock and awe campaign Kashkari has commenced from the Northland. What’s the big bank taunting and nu-tech blogging really all about? Most respectable policy-watchers refuse to speculate (one source once directed me to a campaign ad in which Kashkari wields an axe before declining to comment for a piece I was writing) but we can certainly make some educated guesses.
Politics: Considering he waded into politics with the oh-so-modest goal of trying to win the most visible governor’s seat in the nation, the obvious assumption is that Kashkari is using the Minneapolis Fed gig to burnish his credentials for another run at a major office. Kashkari put together a surprisingly competitive platform of conservative economics and libertarian social politics in his 2014 bid to be governor of California. But he was dogged throughout his run by the fact that the average voter knew him as “the guy who ran the bailout.” Adding a Teddy Roosevelt-esque trust-busting bit to his political character will give him more credibility on issues of big finance in the future; he’s also got enough tape railing against the banks to fill out a whole order of 30-second ads.
If one of the financial behemoths goes down sometime in the next few years and drags us all with it (because we all know it/they would), Kashkari might have a chance to benefit in a big way. Dianne Feinstein and Jerry Brown aren’t getting any younger.
The Big Chair: Janet Yellen’s term is up in 2018, and other than a recent hint that he might not fire her at that time, most of the financial world assumes Trump will name his own replacement. The Minneapolis Fed still seems like a weird place to polish your political bona fides, and it’s possible that Kashkari accepted the post because he wants to push to be considered for the Fed’s top spot next year. Trump clearly adores the bulldog straight talkers type with simple-sounding solutions to complex problems, and was happy to pile on the megabanks for political purposes when he was campaigning. The fact that the Gary Cohn Goldman Clique is on the rise in the White House certainly makes it more likely that a trusted hand from the last financial crisis and former Goldman Guy could get his name thrown in the hat in a serious way.
And while playing gadfly to the big banks seems like a foolish move if this is his goal, Kashkari has also proposed radically reduced regulation for even relatively large community banks. Like, the kind of bank with a CEO who contributes to Republican Senate campaigns.
There is the possibility, too, that after making some scratch and a name for himself in the financial world, Neel is simply looking to put in place good policies and do a honest day’s work for the public. If that’s the case, we wish you godspeed, Neel.
Robb Soukup is a freelance journalist who previously covered the banking sector and The Fed for S&P Global Market Intelligence.