Registered: Feb 2003
10-06-08 06:42 AM
So Hank reaches into the bullpen and pulls out the rookie who struck out on all the previous crap when the crises wasn't a crises.
Man this article should make the market soar tomorrow.
WASHINGTON -- Treasury Secretary Henry Paulson is expected to tap Neel Kashkari, a key adviser on whom he has come to rely heavily during the financial crisis, to oversee Treasury's $700 billion program to buy distressed assets from financial institutions, according to people familiar with the matter.
Mr. Kashkari, 35 years old, a Treasury assistant secretary for international affairs and a former Goldman Sachs Group Inc. banker, is expected to be named interim head of Treasury's new Office of Financial Stability as early as Monday. The position confers substantial power on Mr. Kashkari, who will oversee Treasury's effort to buy bad loans and other distressed securities clogging the books of financial institutions and making them reluctant to lend.
The position is interim, pending Senate confirmation. It isn't likely the Senate will move on the matter before the November elections. Mr. Kashkari isn't expected to remain in the post after January, when the Bush administration comes to an end.
Mr. Kashkari has become one of Mr. Paulson's key advisers over the past year as the housing meltdown deepened and spread to other parts of the economy.
In his new role, Mr. Kashkari will oversee some key decisions on how the program operates. While Congress gave Treasury the authority to start buying assets, many big choices remain, such as which asset managers to hire, which securities to purchase and how to purchase them.
Treasury is trying to determine how to handle conflicts of interest as a result of the program, especially with regard to the asset managers it hires. Anyone with direct experience of these mortgage assets will likely work for a firm with a financial stake in the same assets. Congress told Treasury to establish guidelines to deal with these conflicts and Treasury is likely to establish "firewalls" between asset managers who work for the department and their firms to avoid anyone sharing information. While it is unlikely that all conflicts will be eliminated, Treasury wants to find a way to manage conflicts using strict guidelines, according to people familiar with the matter.
Mr. Kashkari originally trained as an aerospace engineer and worked on developing technology for NASA before earning an MBA at the University of Pennsylvania's Wharton School. He spent much of his tenure at Treasury helping Mr. Paulson stem the fallout from the housing correction. He helped implement an alliance of mortgage-industry players who joined last year to help homeowners in danger of foreclosure.
Mr. Kashkari was part of the Treasury team that negotiated the asset-repurchase program with Congress, putting in marathon sessions along with Robert Hoyt, Treasury's general counsel, and Kevin Fromer, the head of legislative affairs. He was also one of the originators of the plan. Last year, he and Phillip Swagel, assistant secretary for economic policy, crafted a proposal called "break the glass" -- referring to the emergency nature of using such a tool -- which envisioned Treasury buying bad loans and other assets.
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, according to 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.
Write to Deborah Solomon at firstname.lastname@example.org