Don’t break up the big banks. Give Islamic banking a try.

Recently appointed Minneapolis Federal Reserve President Neel Kashkari stunned the banking industry after a recent speech in which he advocated breaking up “too big to fail” banks. In remarks at the Brookings Institution in mid-February, Kashkari said the “biggest banks are still too big to fail and continue to pose a significant, ongoing risk to our economy.” One solution he proposes is to break up large banks into smaller, less influential entities. He also suggests turning the large banks into public utilities by forcing them to hold so much capital that they are almost guaranteed to remain solvent. The goal seems to be greater access to capital with less risk of a financial collapse like we saw in 2008-09. While these ideas have merit, Kashkari didn’t mention one option that could arguably result in the greatest social good: Islamic banking. If he’s interested in a banking system that works for everyone and an alternative that can co-exist within our current regulatory regime alongside cooperatives like credit unions, it’s an idea worth considering. Here’s why. The public perception of the finance industry in general is that it only exists to benefit the rich. Islamic banking requires financial institutions to have an