×

Amazon HQ2 is a 'money losing investment for taxpayers,' warns top Fed official

  • The city Amazon chooses for its $5 billion second headquarters may end up paying too high of a price, says Neel Kashkari.
  • Cities are usually willing to offer generous subsidies to attract a project on this scale in hopes of getting economic benefits.
  • In this case, Kashkari argues, it's "a money losing investment for taxpayers."

The city Amazon ultimately chooses for its $5 billion, 50,000-worker second headquarters may end up paying too high of a price compared with the economic benefit that the project would bring, said Neel Kashkari, a top official at the Treasury Department during the 2008 financial crisis.

Kashkari, currently president of the Federal Reserve of Minneapolis, told CNBC on Friday he was thrilled when he learned his city was not among the 20 Amazon HQ2 finalists.

"When I heard that Minneapolis was not on the short list, my research director said to me, 'We dodged a bullet,'" said Kashkari, who said he thinks Amazon founder and world's richest man Jeff Bezos "knows exactly where he wants to put his second headquarters."

But Kashkari said he believes Bezos wants to get the best deal possible by getting the cities to undercut each other with concessions. "He's getting all the cities to compete on who can write the biggest check so that he can get the location he wants and the biggest subsidy from taxpayers."

Amazon did not immediately to respond to a request for comment.

Cities are usually willing to offer steep tax breaks and other generous subsidies to attract a development project on the scale of Amazon's second headquarters on the hope of a boost of economic activity.

But Kashkari contended that it's "a money losing investment for taxpayers."

"Let's see how big a check they write," he said.

In addition to his time at the Treasury and the Fed, Kashkari also unsuccessfully ran as a Republican for governor of California. He also worked at investment giant Pimco as a managing director and head of global equities and as a vice president at Goldman Sachs.

Sign Up for Our Newsletter Morning Squawk

CNBC's before the bell news roundup
Get this delivered to your inbox, and more info about about our products and services.
By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.