Bailout Czar's Background Detailed
Making its first move under the bailout law enacted on Oct. 3, the Treasury Department named Neel Kashkari as Interim Assistant Secretary for Financial Stability, overseeing the new Office of Financial Stability that will manage the Troubled Asset Relief Program. That's the formal name for the new $700 billion fund that will buy distressed bonds, derivatives and mortgage loans from U.S. banks.
Kashkari will also retain his current title of Assistant Secretary of the Treasury for International Economics and Development. However, the department said those responsibilities will transfer to Assistant Secretary Clay Lowery.
While the post requires Senate confirmation, The Wall Street Journal says a Senate review probably won't happen until after the national elections next month, and Kashkari isn't expected to remain after the Bush administration leaves office in January.
Expected to Seek Asset-Management Bids This Week
Nevertheless, Treasury is trying to get the program running as quickly as possible. "It is expected to begin soliciting bids from asset managers this week and could hire several managers before the week is over," the Journal says, citing people familiar with the matter. "The department plans to hire managers with expertise in the types of securities the government likely will buy, in particular mortgage-backed securities and residential mortgages."
A former aerospace engineer and vice president in investment banking at Goldman Sachs, Kashkari joined Treasury in July 2006 as a senior advisor to Secretary Hank Paulson. He has been a key player in several Treasury Department initiatives stemming from the housing and mortgage crisis.
The WSJ reports that the 35-year old Kashkari, along with including Treasury's general counsel Hoyt and head of legislative affairs Kevin Fromer, "stayed up until 4 a.m. last Sunday putting together the $700 billion bailout bill that was shot down by House Republicans the next day." Last year Kashkari helped craft a Treasury contingency plan to buy bad loans and other assets in an emergency. He also was responsible for a subprime loan modification plan enacted earlier this year, and Treasury's initiative to kick-start a covered bond market in the United States. Outside the housing area, his projects at Treasury included an energy security plan and efforts to promote infrastructure development in India.
He came to Treasury two years ago from Goldman Sachs, where he led the IT security investment banking practice in San Francisco. He holds an M.B.A. from Wharton and B.S. and M.S. degrees in engineering from the University of Illinois at Urbana-Champaign. Before moving over to finance, he was a researcher at TRW, developing technology for NASA space missions such as the James Webb Space Telescope.