November 10, 2015 / 5:05 PM / 4 years ago

UPDATE 4-Kashkari, critic of easy money policy, to run Minneapolis Fed

(Adds more color from tweets, comment from former Dallas Fed president and Fed Up)

By Ann Saphir

SAN FRANCISCO, Nov 10 (Reuters) - Neel Kashkari, who as a top U.S. Treasury official managed a key part of the banking and auto industry bailouts during the financial crisis, was picked on Tuesday to be the next president of the Minneapolis Federal Reserve Bank.

A former executive at Goldman Sachs and global investment firm Pimco who ran as a Republican for California governor last year, Kashkari will take over from Narayana Kocherlakota on Jan. 1.

Kashakari, 42, has been a critic of the U.S. central bank’s accommodative monetary policies, warning that its easing policies are less effective as underlying U.S. economic growth slows, and could spark inflation.

He may also be the first Fed policymaker featured in People magazine’s “sexiest men alive” edition and the first to tweet prolifically about everything from bears to football to his first bite of a cheese-covered hotdog inside a piece of fried chicken (“Tastes better than it looks!”).

He will join the central bank just as Fed Chair Janet Yellen plans to begin weaning the U.S. economy from seven years of near-zero interest rates.

The choice of Kashkari, 42, marks a departure for the Fed’s smallest regional bank, whose current chief is an enthusiastic supporter of monetary policy easing.

Kashkari’s varied experience in politics, banking and government make him an unusual addition to the Fed policy-setting table. He also has a theatrical flair: in 2014 in what he said was both a publicity stunt and an effort to draw attention to poverty in the California gubernatorial race, he lived as a homeless man for a week. He posted a Facebook video about it afterwards.

Kashkari ran the government’s $700 billion Troubled Asset Relief Program, which some credit for saving Detroit’s auto industry and for playing an important role in keeping the financial industry from collapsing.

In 2009, he went to work for Pimco to build an equities business, leaving in 2013 and becoming the Republican candidate for California governor the following year. He lost handily to incumbent Democratic Governor Jerry Brown.

SON OF INDIAN IMMIGRANTS

Kashkari will not get to vote on Fed policy until 2017, according to the schedule of rotating votes on the central bank’s policy committee.

In 2012, as the Fed launched its third round of bond-buying to spur the U.S. economic recovery, Kashkari was dismissive.

“At the end of the day, this is not going to lead to real economic growth,” he told CNBC at the time. “Unfortunately, it likely leads to an inflationary outcome.”

He was not available for an interview on Tuesday, a Minneapolis Fed spokesman said.

The son of Indian immigrants, Kashkari was born in Akron, Ohio and was an aerospace engineer before joining Goldman in San Francisco.

He becomes the third former Goldman executive to be appointed to head a Fed regional bank this year. These moves have angered the Fed Up coalition of labor groups and community activists, which says the bank represents the problems that led to the 2007-2009 financial crisis.

To Richard Fisher, who ran the Dallas Fed until March, that’s a plus: “If you don’t understand financial markets today, you can’t really understand how the economy operates,” he told Reuters. “As long as they remember, and they do, that they work for the American people.” (Reporting by Ann Saphir; Additional reporting by Jim Christie in San Francisco and Jennifer Ablan and Richard Leong in New York; Editing by Chizu Nomiyama and Paul Simao)

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