MINNEAPOLIS, March 31 (Reuters) - Minneapolis Federal Reserve Bank President Neel Kashkari said Friday that on his thus far unsuccessful crusade to persuade policymakers to jack up capital requirements for big U.S. banks, he is taking a cue from the struggle for gay marriage rights.
“The activists stayed on it, stayed on it, stayed on it, stayed on it, stayed on it,” Kashkari said of efforts in California to win equal-rights treatment for gay unions after voters made same-sex marriage illegal in 2008. In 2015, the U.S. Supreme Court made it legal throughout the country.
“I think on the issue of too big to fail, we have an obligation to keep speaking up; people may not agree with us but if we keep speaking up, maybe they will agree with us,” Kashkari told the Banking Law Institute in Minneapolis.
For more than a year Kashkari has worked to convince his fellow central bankers, other regulators, lawmakers and the public that the biggest U.S. banks are a threat to financial stability because they are not adequately regulated.
Several months ago he proposed forcing them to hold much more capital than they currently do, a strategy he says will make them safer and the industry more competitive, but that banks say will hurt them and the economy.
So far his plan has gained few backers, despite his giving speech after speech defending and explaining it.
The new U.S. administration, far from imposing more restrictions on financial institutions, appears inclined to roll them back by dismantling at least some parts of the Dodd-Frank Wall Street reform act that was aimed in part to prevent faltering big banks to cause a repeat of the 2007-2008 financial crisis.
Kashkari, who ran for California governor in 2014 as a Republican, also repeated Friday his call for more diversity at the central bank, noting that the Atlanta Fed has just hired the Fed’s first African-American regional bank president, Raphael Bostic. Bostic will also be the Fed’s first openly gay policymaker. (Reporting by Ann Saphir; Editing by Chizu Nomiyama)