Meet the New Man

Meet the New Man

Relative unknown Neel Kashkari leaps from obscurity to lead role in rescue.

bailout by Robert Schmidt and Rebecca Christie / Bloomberg News

Minutes before Neel Kashkari's public debut as the chief of the U.S. Treasury's financial rescue plan, he sat in a hotel lobby in Washington, unrecognized by many of the international bankers gathering to hear him speak.

By the time Kashkari finished his 21-minute address yesterday, laying out Treasury's first concrete details of the $700 billion bailout, a swarm of television cameras and reporters followed him out the door.

In less than two weeks, the 35-year-old former Goldman Sachs Group Inc. banker has risen from obscurity to center stage in the U.S. financial crisis. He has been given extraordinary latitude, and not much time, to set up an organization and procedures for carrying out the Treasury's counteroffensive on the market meltdown.

Kashkari and Treasury Secretary Henry Paulson are "doing this on a wing and prayer, and it's all happening quickly," says Paul Light, a professor at New York University who studies the federal bureaucracy. "There is such pressure to get it done that I think all rules are out."

Paulson today announced plans to provide $250 billion in capital injections to banks "to restore confidence in our financial institutions" and urged the banks to use the funds to spur economic growth.

As head of the new Office of Financial Stability during the final months of George W. Bush's presidency, Kashkari is responsible for overseeing the selection of private contractors for Treasury's Troubled Asset Relief Program, hiring permanent government employees for the effort and setting standards that will govern how conflicts of interest are managed.

Neither months or years

"A program as large and complex as this would normally take months - or even years - to establish," Kashkari says. "We don't have months or years."

Kashkari's appointment earlier this month drew comments from Wall Street veterans and industry observers because of his youth, his relative inexperience with markets and his ties to Goldman, where Paulson had been chief executive officer.

"It was unfortunate that it was yet another Goldman Sachs person taking the helm," says Michael Greenberger, a former official at the Commodity Futures Trading Commission and now a professor at University of Maryland School of Law. "Essentially it appears that he is turning to the very financial institutions that led to the problems to fix the problems."

Kashkari worked in Goldman's San Francisco office on mergers and acquisitions in the information-technology industry. He reported Goldman paid him $738,000 in salary and bonus before he joined Treasury in July 2006 as a senior adviser to Paulson, according to his federal financial disclosure form.

Trained as engineer

Prior to landing a job on Wall Street, Kashkari was an aerospace engineer. He worked to develop technology for National Aeronautics and Space Administration missions, including the James Webb Space Telescope.

The son of Indian immigrants, Kashkari grew up in Ohio and received bachelor's and master's degrees in engineering from the University of Illinois at Urbana-Champaign. He has an MBA from University of Pennsylvania's Wharton School.

Before taking over his current role at Treasury, Kashkari was Paulson's top aide on housing and mortgage issues.

While Treasury officials say Kashkari has been working long hours and weekends to get the troubled assets office established, they also note that major policy decisions are being made by Paulson. One of Kashkari's biggest challenges has been getting the program up and running as Paulson has kept shifting strategies for combating the credit crisis.

The Treasury Department initially proposed a plan for buying toxic mortgage-backed securities from financial firms, and pushed a broad version of the proposal through Congress. Last week, Paulson says he would use his authority under the legislation to have the government take equity stakes in a wide range of banks, the action he announced today.

"Circumstances have changed dramatically" since the law was signed, says Edwin Truman, former head of the Federal Reserve's international finance division and now a fellow at the Peterson Institute for International Economics in Washington. "It's become more clear that the economy is headed south."

Stan Collender, a former analyst for the House and Senate budget committees, says that while Kashkari is well qualified for the job, whoever wins the presidency next month will "start dealing with the economic crisis the day after election day."

Paulson, in a statement last week, said he was consulting with the White House, lawmakers and the presidential campaigns of John McCain and Barack Obama to find a permanent head for the troubled asset program. Paulson said he wanted the person confirmed by the Senate, as the law requires, "as soon as possible."