The Fed: Kashkari to Congress: Err on being generous

Bloomberg News/Landov
Neel Kashkari, president and chief executive officer of the Federal Reserve Bank of Minneapolis

“My advice to Congress as they’re designing their programs to help workers and to help small businesses, err on being generous.”

Neel Kashkari, Minneapolis Fed president

That’s the advice of Neel Kashkari, the current Minneapolis Fed president who also was involved with the last financial crisis when he ran the $700 billion Troubled Asset Relief Program as assistant Treasury secretary in 2008.

Kashkari’s advice on 60 Minutes, the primetime CBS news program, was that it was far more effective to keep workers in their jobs than provide unemployment insurance.

“Unemployment insurance is important. But it would be much better and much better for the taxpayers and for the country to keep small businesses operating and to keep them with their employees intact.”

The U.S. Congress has been slow in providing aid compared to other countries, with the latest stimulus bill failing to advance in the U.S. Senate.

The Fed by contrast has launched a laundry list of programs to stimulate borrowing in addition to cutting interest rates to nearly zero and restarting quantitative easing.

Kashkari also said he was sympathetic to the idea of the Fed buying corporate and municipal bonds. The Fed‘s asset-purchase plan so far is limited to Treasurys and mortgage-backed securities. Related:How a Fed plan to boost corporates and municipal bonds could work