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Minneapolis Federal Reserve Bank president Neel Kashkari will be in Sioux Falls next week, touring the area and speaking at the Downtown Rotary Club at noon Aug. 7 at the Holiday Inn City Centre.
In this preview of his visit, Kashkari said he’s eager to learn more about issues facing the area.
What type of information can your Sioux Falls audience expect you to cover?
I’m coming to Sioux Fall to listen and learn. I’ll share some of what we as do as a Federal Reserve Bank, but I am also eager to hear from South Dakotans because I represent you in the Federal Reserve System. As anyone who follows me on Twitter can see, I’m an open book, so I look forward to meeting many of you around Sioux Falls and hope you bring a tough question for me.
You lead a diverse economic region for the Federal Reserve. How would you say the economic conditions in South Dakota, and specifically Sioux Falls, are comparing to the rest of the region?
Economic conditions in the Ninth Federal Reserve District are generally healthy. The local Sioux Falls area is reflective of that strength, and it may even be doing a bit better. As in most of the region, unemployment is low — below 3 percent in Sioux Falls — but we’re always interested to hear about local challenges. One concern I’ve heard from businesses elsewhere is that it’s hard to find workers. I’m curious to hear from those I will meet in Sioux Falls because they might raise a new concern that I should be aware of or maybe haven’t heard before.
Are you noticing any warning signs in the data you’re analyzing that business leaders should be aware of?
A key question for policymakers is understanding how much slack still remains in the job market. The official statistics suggest the vast majority of people who want to work are able to find jobs, but we also need to see the human faces behind the data. Only workers, community leaders and business owners can share their personal stories. They have so much knowledge about their local industries and communities, insight that is extremely valuable to us at the Federal Reserve because it is real-time information that may not have shown up in the data yet. I hope to hear some of these personal stories in Sioux Falls.
Do you anticipate any upcoming changes in monetary policy that would be of particular interest or impact to this region?
One of the challenges for monetary policy is that it is a blunt instrument: we have to set one interest rate for the whole country. We can’t tailor it to individual states or communities. So we try to find the monetary policy that will work best for the country as a whole. That’s why it is critical that I hear directly from South Dakotans about how the economy is doing so I can bring that insight back to Washington, D.C.
Since taking over your new role, you’ve announced a plan to end the “Too Big to Fail” problem. What does that entail?
The solution is simple: require the largest banks to fund themselves with more capital so that they’re strong enough to withstand big and unexpected economic shocks. When we buy a new home, banks ask us to put down 20 percent so that they’re protected in case we run into financial trouble. We should apply the same standard to the largest banks, requiring them to put at least 20 percent down in the form of equity to prevent bailouts in case the financial system runs into trouble. Readers interested in learning more can read the Minneapolis Plan on our website and comment on social media using the hashtag #endingTBTF.
You’ve also launched the Federal Reserve’s new Opportunity and Inclusive Growth Institute, housed at the Minneapolis Fed. How can Sioux Falls business leaders tap this resource?
Anyone interested can follow the research and initiatives coming out of the new institute, including livestreaming conferences and events, on the institute’s website, where they can also sign up for updates.
From assessing the area economy to detailing his plan to keep banks from becoming “too big to fail,” Neel Kashkari, president of the Minneapolis Federal Reserve Bank, previews his visit to Sioux Falls.