RACHEL MARTIN, HOST:
President Trump says he's eager to sign a new bill that rolls back financial regulations that were set up after the last financial crisis. It was 10 years ago. Risky lending practices led to bank failures, a housing crash and the worst financial downturn since the Great Depression. This new bill that was passed in Congress this week exempts small and midsized banks from key aspects of the so-called Dodd-Frank regulation. It's among several efforts to loosen banking rules. All of that worries Neel Kashkari. Kashkari helped set up the controversial bank bailout program during the crisis. It was called TARP - one of the first efforts to stabilize the economy. Now he is president of the Federal Reserve Bank of Minneapolis. And I asked him if he thought these regulations were always too strict.
NEEL KASHKARI: Easing restrictions on community banks is a good idea. And with Minneapolis Fed, I put out our own plan to do that. This bill does much more than that. It does a little bit for community banks, but it actually does a lot for very large - what are called regional banks that actually could be systemically risky for the economy. And it does nothing to address the too-big-to-fail issue of the big giant banks in America that were at the heart of the financial crisis in 2008.
MARTIN: But it's my understanding that the main regulations that target those big banks - the Lehman Brothers banks, banks of that magnitude - are still in place.
KASHKARI: Well, they are, but they don't go far enough. And so Dodd-Frank did do some good. The banking system is stronger than it was going into the financial crisis. It's now making record profits. But if there were another economic downturn, if there were another crisis, the biggest banks are still risky, and I think that they would have to turn to the taxpayers again.
MARTIN: So the safeguards that we currently have, which now are going to be scaled back - that - even those aren't enough to prevent another financial meltdown.
KASHKARI: That's right. And that's - again, we need to focus on the very biggest banks, where the real risk is. I agree that small community banks are not going to bring down the U.S. economy. And by the way, small community banks have a lot more financial resiliency today than the biggest banks. So what we need to be doing as a country is not forgetting about the crisis; we need to be much tougher on the biggest banks so we can protect Main Street and taxpayers and not walk these regulations back.
MARTIN: But as you know, it is unlikely that in this particular Congress - that you're going to get support for even stricter regulations on Wall Street.
KASHKARI: I think that's right. But as I've met with many members of both Republicans and Democrats, almost everyone agrees, the big giant banks in America are still too big to fail, and bailouts should not be on the table. We need to make sure that they are strong and they have enough capital so that if they make mistakes, Main Street and workers and taxpayers are protected. And so I agree; it doesn't seem like it's going to happen anytime soon. But the biggest risk for all of us is that our memories fade, we forget how bad the crisis was, and that it happens again. These things tend to repeat themselves.
MARTIN: Neel Kashkari is president of the Federal Reserve Bank of Minneapolis. Thank you so much for your time.
KASHKARI: Thanks for having me. Transcript provided by NPR, Copyright NPR.