Indian-American Neel Kashkari aspires for greater things
[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]T[/dropcap]he appointment of Neel Kashkari, a 42-year old Indian-American and former Treasury Official / Goldman Sachs Investment Banker as the Federal Reserve Governor of Minneapolis Fed, points to him going on to achieve greater heights in the politics of the United States.
With Bush not running for reelection allowed the government to “do things that were deeply unpopular but we knew were the right thing.
– Neel Kashkari
For those who do not know Kashkari, he was the point man for “Hammering Hank” Hank Greenberg, the Secretary of the Treasury in the 2008 Financial Crisis as the Treasury Dept. scrambled to put together the Troubled Assets Relief Program (TARP) which was used to bail out Banks and other companies deemed “too-big-to-fail.” The Secretary of Treasury is the equivalent of a Finance Minister.
Early life and education
Kashkari was born on July 30, 1973, in Akron, Ohio, to Sheila Kashkari, a pathologist at Akron City Hospital, and Chaman Kashkari, a professor of Electrical Engineering at the University of Akron. His parents are Kashmiri Pandits who immigrated to the United States from Kashmir in the 1960s. He was one of a few people in the Goldman Sachs organization who had an Engineering Undergraduate Degree (Univ. of Urbana Champaign) with a Management Degree (MBA) from Wharton.
His work at the Dept. of Treasury
Beginning in summer 2007, the value of some financial instruments backed by U.S. subprime mortgages declined sharply as it became clear that many of the borrowers would default on the mortgages. This caused a crisis as the banks holding the mortgages saw their assets decline in value and rushed to foreclose the loans. This ultimately intensified into a global financial crisis with broad implications. The recently released movie Big Short talks about this in detail.
[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]K[/dropcap]ashkari played important roles in several episodes of the crisis. He led Treasury’s participation in the Hope Now Alliance, a mortgage industry initiative coordinated by the Federal Government that aimed to reduce foreclosures by modifying loan terms on a loan-by-loan basis. In March 2008 he represented Treasury at negotiations that led ultimately to the federally sponsored takeover and rescue of the investment bank Bear Stearns by JP Morgan Chase. He also worked closely with Paulson on Treasury’s takeover of the government-sponsored enterprises Fannie Mae and Freddie Mac on September 6, 2008, and the federal bailout of American International Group on September 16.
In early 2008, Paulson directed Kashkari and fellow Treasury aide Phillip Swagel to write a plan to recapitalize the banking system in case the crisis worsened. The plan called for Congress to authorize Treasury to spend $500 billion to buy mortgage-backed securities from troubled banks, replacing them on banks’ balance sheets with safe, liquid Treasury bills. This would prevent runs on the banks and encourage them to lend.
[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]F[/dropcap]ollowing the collapse of the investment bank Lehman Brothers on September 15, 2008, the Emergency Economic Stabilization Act of 2008 (EESA) was enacted on October 3. Both Democrats and Republicans in Congress voted for the law. Kashkari was one of several Paulson aides who was heavily involved in the crafting the legislation. Based in large part on Kashkari and Swagel’s recapitalization plan, the EESA created the TARP, a $700 billion bailout fund.
To administer TARP, the Treasury Secretary created an interim Assistant Secretary post to run the office. Kashkari first came to widespread public attention on October 6, 2008, when Paulson named him to this position.
During his time heading TARP, Kashkari was frequently called to testify before Congressional oversight panels. The House members would often question him hostilely over the politically unpopular program, but at least one, Representative Dennis Kucinich, assured Kashkari privately that he thought Kashkari was doing a great job. Kashkari later said that with Bush not running for reelection allowed the government to “do things that were deeply unpopular but we knew were the right thing.”
Run for Governor of California
A lifelong Republican, Neel ran unsuccessfully against the incumbent Jerry Brown, a Democrat for the Governorship of California in the 2014 election. In a state where 85% of the budget has already been mandated on how it is to be spent by the public, this would have been more of a nice qualification for a run for bigger things than anything else. How far this star is going will depend on how the Global economy is going to fare in the next decade. Kashkari has youth and experience to handle some of the difficult issues that may crop up during the next economic crisis, which many say is a “when” and not an “if”.
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