Top Fed Official Warns Banking Crisis Could Push US into Recession

Neel Kashkari, the Minneapolis Fed boss and a veteran of financial crises, has warned that the worst banking crisis since the collapse of Lehman Brothers is pushing the U.S. economy closer to a recession. Kashkari predicted that the combination of depreciating long-dated securities held by banks and loans granted to the troubled office real estate market would likely trigger further losses in the financial sector. Capital markets have been freezing the banking sector's perceived weaker regional lenders out of the credit system, he argued, starving them of access to liquidity and increasing the chances that economic activity would shrink.