Ex-scientist leading bailout
Rescue Plan Before drafting legislation, he worked with rockets

By The Associated Press

Published: October 7, 2008

WASHINGTON — Turns out rescuing the economy will take a rocket scientist.

That’s what the man picked Monday to engineer the largest financial bailout in U.S. history did before shifting to the world of finance.

Neel Kashkari, who worked closely with Treasury Secretary Henry Paulson at Goldman Sachs, followed him to the Treasury in July 2006 and has served as one of his key advisers — handling a number of tough assignments.

Kashkari, an Indian-American who was born in Ohio, is one more example of how Paulson has drawn on former executives at Goldman to staff Treasury. Paulson also leans heavily on former Goldman Sachs executives Dan Jester, a financial institutions banker, and Steve Shafran, who focused on corporate restructuring while at Goldman.

Officials said that Paulson was particularly impressed with Kashkari’s critical help in the creation of the HOPE Now program, an October 2007 Treasury initiative to cajole private mortgage companies into stemming a tidal wave of foreclosures by getting faltering borrowers into more-affordable mortgages.

The program has been criticized for offering too little in terms of assistance, but the Bush administration points to it with pride as an example of a successful effort to harness private sector forces to deal with the steepest slump in housing in decades.

Kashkari, 35, has had a varied career since getting his bachelor’s degree and master’s degree in engineering from the University of Illinois at Urbana-Champaign, following in the footsteps of his father, a retired professor of engineering.

Kashkari worked in research and development for TRW Inc., which is now part of defense contractor Northrop Grumman Corp., developing technology for NASA space science missions such as the James Webb Space Telescope, the replacement program for the Hubble telescope.

Kashkari decided to switch from rockets to finance, returning to college where he got a master’s degree in business administration from the Wharton School, the business school of the University of Pennsylvania. He then joined Goldman Sachs Group Inc. in San Francisco, where he headed up Goldman’s information technology security investment banking practice.

At Treasury, Kashkari has been given a string of key tasks from helping to get Hope Now launched to helping draft the legislation that Congress passed last week creating the $700 billion rescue effort.

Scott Talbott, a lobbyist for the Financial Services Roundtable, a group of 100 large companies, said Kashkari will have his work cut out for him.

"He’s got the health of the housing market and the economy on his shoulders,” he said. "But he’s got a $700 billion checkbook too.”

Kashkari will keep his current title as assistant Treasury secretary for international affairs, but will head up the newly created Office of Financial Stability on an interim basis.

The designation of Kashkari as the interim head of the new office was necessary because the permanent head of the office, which is a presidential appointee, must be confirmed by the Senate, currently in recess ahead of the November elections.

Some analysts were not impressed with his selection.

Robert A. Eisenbeis, a former director of research at the Federal Reserve Bank of Atlanta, said that Paulson should have chosen someone more familiar with the government’s response to the savings and loan crisis of the late 1980s and 1990s, when the Resolution Trust Corp., was created to dispose of billions of dollars of assets from bankrupt savings and loans.

"He’s got the health of the housing market and the economy on his shoulders. But he’s got a $700 billion checkbook too.”

Scott Talbott

Comments