Neel Kashkari Named Next Minneapolis Fed President

By Christopher Ryu,
Money & Investing Writer

From aerospace engineer, to banker at the San Francisco Goldman Sachs (NYSE: GS), to managing director of an investment firm –Pimco- and even running for governor of California, where he came in at second, Neel Kashkari has done it all, but he is not done yet.

Kashkari, as of Tuesday, will assume the role of Minneapolis Fed President on Jan. 1, 2016, where he will be on the policy making panel or the Federal Open Market Committee (FOMC).

There he will be replacing Narayana R. Kocherlakota as the youngest member of the 17 person committee.

After being on the private side for a while, Kashakri, in an interview with The Star Tribune of Minneapolis, said he was looking forward to getting back onto the public side.

“If you want to help 1,000 people, donate to a charity. That’s really, really important,” Kashkari told the Tribune. “If you want to help a million people, or 10 million people or 100 million people, the only way you can do that is by improving public policy.”

Kashkari is not starting his role as Fed president with all sunshine and rainbows.  In 2012, Kashkari was very outspoken on the Fed’s decision to start a “second round of bond-buying,” in an interview by CNBC, he said
“At the end of the day, this is not going to lead to real economic growth,” He said in the interview. “Unfortunately, it likely leads to an inflationary outcome.”

On Twitter, he exclaimed that bond-buying is like injecting the economy with morphine, “Makes u feel better but doesn’t cure,”

His predecessor, Narayana R. Kocherlakota, also came into the Fed as president with outspoken views on the ability of the Federal Reserve in improving economic conditions.

During his time as Fed president, his views changed and Kocherlakota became a Fed supporter as well as being the only Fed official pushing to expand stimulus.

With all this, Kashkari will not be able to vote on monetary policy and issues until 2017.

Kocherlakota will also be exempt from the upcoming December meeting, as it is customary for outgoing FOMC members. This comes at a crucial time, where many people predict the Fed will lift its seven-year term with zero-interest and begin slowly bringing back up interest rates.

Kashkari, with his incredible resume, also has some head spinning jobs as well.  Kashkari is also known for leading the government’s bailout on the banking industry during the financial crisis under both Bush and Obama.
The government was authorized to buy up $700 billion in defaulting assets to level the global credit market.

This still is viewed as the most controversial measure the government has taken during the financial crisis.

Kashkari was not the only ex Goldman employee to be brought up to lead the Fed’s regional reserve banks.

Patrick Harker, the new Philadelphia Fed President, appointed in March, and Robert S. Kaplan, the new Dallas Fed President, appointed in August are also ex Goldman men.

Harker was a former Goldman Sachs trustee and Kaplan was the former vice chairman for Goldman.

On top of the three new ex Goldman affiliates, the current New York Fed President, William C. Dudley was also an alum of Goldman.

Four out of the twelve Federal Reserve District Branches are run by Goldman affiliates.

“We’re disappointed that yet another former Goldman Sachs insider has been elevated to a regional president position,” said Jordan Haedtler at the Center for Popular Democracy in Washington.

Federal Reserve Presidents are selected by the board for each district.
MayKao Hang, incoming chair of the Minneapolis Fed’s board of directors and co-chair of the search committee, in a statement about Kashkari said, “Mr. Kashkari is an influential leader whose combined experience in the public and private sectors makes him the ideal candidate to head the Minneapolis Fed.”

A version of this article appeared in the Tuesday, November 17th print edition.

Contact Christopher at
christopher.ryu@student.shu.edu

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