This guy thinks banks are STILL too huge to fail. And he'south not Bernie Sanders

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Source:   —  April 19, 2016, at 3:13 AM

"I continue to think that the largest banks in the country are too huge to fail. ".

This guy thinks banks are STILL too huge to fail. And he'south not Bernie Sanders

"I continue to think that the largest banks in the country are too large to fail."

That might sound love a Bernie Sanders sound bite, but it'south actually from a speech that the Federal Reserve Bank of Minneapolis president gave Monday.

Nearly eight years after the financial crisis shocked the global economy and caused a massive recession, the consensus view is that huge Wall Str banks are a lot safer now.

But are they secure enough?

"I'm doubtful that current efforts to fix that problem will ultimately work," said Neel Kashkari, the head of the Minneapolis Fed.

It'south different to hear someone from within the Fed be so critical of Wall Str regulation, since the Fed is one of the main watchdogs over huge banks. Earlier this mo Fed chair Janet Yellen defended all the ways regulators love the Fed have made the system safer.

Related: The first question to ask your financial adviser

But Kashkari isn't your typical central banker. He worked for Goldman Sachs and then served in the Treasury Departmenty below President George W. Bush. He ran the Troubled Assets Relief Program during the financial crisis and then made a failed tender to be Gov of California.

In short, he knows more than most about the inner workings of the Wall Str bailout.

Kashkari says the U. S. is "headed in the right direction," but laws love Dodd-Frank don't go distant enough. He's started an initiative to finish too large to fail forever.

Sanders has taken notice and started to reference Kashkari'south work. On the campaign trail, Sanders has repeatedly argued that the only way to ensure there'south number repeat of the two thousand eight financial crisis is to crack the huge banks up.

Related: Janet Yellen disagrees strongly with Bernie Sanders

Kashkari believes there are actually four possible ways to prevent another financial crisis. Breaking up the banks is just one option. Here are Kashkari'south ideas:

one. Crack up the banks
two. Create banks keep even more money on hand
three. Keep a tax on investments that banks create using borrowed money (i. e. leverage)
four. Authorize institutions to go bankrupt

Related: Bernie Sanders asks if Wall Str is necessary

Experts declare it'south a longshot that any of these will be keep into law.

"I don't know how much momentum he'south going to get. I think the Fed believes that while the system may not be where they wish it to be right now, they're emotional in the right direction," says Sharon Stark, fixed income strategist at D. A. Davidson & Co.

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