Minneapolis Federal Reserve President Neel Kashkari told CNBC on Friday banks need "about twice as much" rainy-day capital to effectively address "too big to fail," which put U.S. taxpayers on the hook to bail out Wall Street firms during the 2008 financial crisis.
Higher capital requirements would be on "the biggest banks, only the biggest banks" to guard against the "contagion risk" of a cascading collapse
He said he's talking about banks with "$250 billion in assets and up. That's about a dozen banks in America."
"Those are the 'too big to fail' banks as we see it," he said.
Dimon, in his annual letter to shareholders this week, wrote "too big to fail" fears have been eradicated. He contended banks are well-capitalized enough to sustain shocks similar to what happened during the financial crisis.
Kashkari disputed Dimon's comments, saying on CNBC: "This is nothing personal. ... Banks don't have nearly enough capital."
"The biggest banks need about twice as much equity capital as they have today," he continued. "We could more or less address 'too big to fail.' We haven't done it yet."
Addressing critics who argue that higher capital requirements would keep banks for lending and hurt the economy, Kashkari said, "This is about analyzing costs and benefits.
"The benefits of higher capital are we avoid these disastrous financial crises," he said. "Safety isn't free."
Kashkari said he'd be willing to accept a little less lending from the big banks because "the benefits outweigh the costs."
At the same time, Kashkari would like to see smaller banks get a break. "We would want to relax regulations on small banks [and] on community banks because they're not systemically risky for the economy."
In his 16 months at the Fed, Kashkari has consistently railed against the size of big Wall Street institutions. He was also the lone dissenter against a Fed interest rate hike in March.
Kashkari, who unsuccessfully ran as a Republican for governor of California in 2014, served as the administrator of TARP, the Troubled Asset Relief Program, at the Treasury Department during the financial crisis.
After leaving Washington, he joined Pimco as a managing director and head of global equities. Before his time at Treasury, he was a vice president at Goldman Sachs.