(Bloomberg) -- The former U.S. Treasury official who led the2008 bailout program for the nation’s biggest banks says in his newrole at the Federal Reserve that Congress andregulators should consider breaking them up to protect thefinancial system from another crisis.

Federal Reserve Bank of Minneapolis President Neel Kashkari,speaking Tuesday in Washington, said his regional Fed bank willstudy ways to toughen U.S. banking laws to prevent anotherfinancial crisis.

Regulators should consider options including breaking up thenation’s largest financial institutions, loading them up with “somuch capital that they virtually can’t fail” and taxing leverage tomake the system safer, he said. Tougher oversight will require newlegislation, he added.

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“The biggest banks are still too big to fail and continue topose a significant risk to our economy,” Kashkari, who managedthe U.S. Treasury’s $700 billion Troubled Asset Relief Program forrescuing banks in the crisis, said in his remarks. It was his firstpublic speech since joining the Fed on Jan. 1 as its newest policymaker.

While Kashkari’s position fits with populist sentiment that hasdriven the rise of presidential candidates including DemocratBernie Sanders, it’s at odds with top Fed leaders includingChair Janet Yellen, who isn’t callingfor dramatic steps such as breaking up large banks.

Such changes would also face a steep uphill battle to adoptionby the Republican majority in Congress, which wants to roll backparts of the Dodd-Frank financial law passed in 2010, rather thango further as Kashkari proposes.

Kashkari’s remarks drew praise from Sanders. “Wall Street cannotcontinue to be an island unto itself, gambling trillions in riskyfinancial instruments, making huge profits, assured that, if theirschemes fail, the taxpayers will be there to bail them out," theVermont senator said in an e-mailed statement.

Kashkari, who took over at the Minneapolis Fed following afailed run for governor of California as a Republican in 2014,compared the risk posed by big banks with that of a nuclear powerplant in explaining why the government would probably have to bailout banks again in the event of another systemic crisis.

‘Astronomical’

“The cost to society of letting a reactor melt down isastronomical,” said Kashkari, who was a Goldman Sachs Group Inc.banker before joining the Treasury during the administration ofRepublican President George W. Bush. “Given that cost, governmentswill do whatever they can to stabilize the reactor before they losecontrol.”

Kashkari, 42, said the Minneapolis Fed will hold a series ofevents and collect public and financial-industry input beforemaking proposals by the end of this year on how to address theissue.

Kashkari, asked about the economy and monetary policy after thespeech, stuck to the Fed’s January statement and said if thereality ends up like the outlook, the U.S. will be headed in a“better direction.”

He will be a voting member of the interest- rate-setting FederalOpen Market Committee in 2017. The Fed’s Board of Governors inWashington sets policy for bank supervision, which is implementedby the 12 regional Fed banks including Minneapolis.

In testimony before Congress last week, Yellen said regulationsimposed since the financial crisis have had “very substantialpayoffs in the form of a much more resilient and stronger, bettercapitalized, more liquid banking system.”

Fed spokesman Eric Kollig declined to comment on Kashkari’sinitiative.

Dallas, St. Louis

Kashkari joins several other regional Fed presidents outside ofthe major U.S. banking centers who have made similar statementsabout too-big-to-fail policy. Former Dallas Fed President RichardFisher proposed that big banks be “restructured into multiplebusiness entities,” while St. Louis Fed chief James Bullard hasbacked limiting the size of individual U.S. banks to a proportionof gross domestic product.

Kansas City Fed President Esther George, a former bankregulator, said in a 2014 interview that she was “disappointed butI guess not surprised” that the problem of too-big-to-fail banksremained and called for “meaningful consequences” for banks thatdon’t submit adequate “living wills,” or plans to be resolved ifthey were to fail.

Kashkari said Tuesday that the financial industry has “lobbiedhard to preserve its current structure and thrown up endlessobjections to fundamental change.”

He rejected the argument that U.S. banks would be at adisadvantage to competitors in nations with looser regulations,because the U.S. “should do what is right for our economy.”

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