WASHINGTON – Neel Kashkari, a prominent business executive and unsuccessful candidate for California governor, has been chosen as head of the Federal Reserve’s regional bank in Minneapolis.
Kashkari will succeed Narayana Kocherlakota, who will step down from the job of Minneapolis Fed president on Dec. 31. Kocherlakota has held the position since 2009 and announced last December that he would not seek re-appointment once his current term ends.
Kashkari was chosen by the regional bank’s board of directors. He most recently served as managing director of PIMCO. A Republican, he ran for governor of California in 2014, losing to Democratic Gov. Jerry Brown.
Kashkari, 42, worked at the Treasury Department from 2006 to 2009. During the height of the financial crisis in 2009, he was tapped by then-Treasury Secretary Hank Paulson to oversee the Troubled Asset Relief Program, the $700 billion bailout program created by Congress.
Before joining the Treasury Department, Kashkari was a vice-president at Goldman Sachs in San Francisco. Previously, he was an aerospace engineer at TRW Corp.
In Minnesota, Kashkari will succeed one of the Fed’s leading doves, the group of Fed officials who favour keeping interest rates low as a way to fight unemployment.
Kashkari’s views on monetary policy are not well known, but he is believed to be less dovish than Kocherlakota. He has expressed admiration for former Fed Chairman Ben Bernanke, describing him on Twitter as “the right leader when our country really needed it.”
However, he has also colorfully highlighted the issue of persistently low inflation.
“Maybe Fed should just admit: ‘We will keep rates at zero until inflation is staring us in the face (and then we will freak out),” he tweeted in May 2014.
In August 2013, he suggested President Barack Obama should choose someone other than Yellen or former Treasury Secretary Lawrence Summers as Fed chairman, tweeting that he hoped Obama picked “someone unexpected.” Obama ended up nominating Yellen for the post.
In his long-shot race for governor against Brown, Kashkari emphasized the need to address income inequality and said he was running an untraditional campaign.
“The issues I’m focused on, they’re not Democrat or Republican,” Kashkari said in an AP interview in 2014.
Kashkari at one point posed as a homeless man looking for work in Fresno, California to underscore his message on inequality.
Jordan Haedtler, campaign manager for the Fed Up coalition, which is seeking to reform the Fed’s appointment process for regional bank presidents, said it was disappointing that Kashkari will be the third regional Fed bank president selected this year with ties to Wall Street giant Goldman Sachs.
The selection is handled by the board of directors for each regional bank. Haedtler called it a process that “is dominated by corporate and financial elites.”
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AP Economics writer Josh Boak contributed to this report.
