Whiz Kid, Hot Seat
By Massimo Calabresi
Neel Kashkari is the world's most powerful temp. Over the next month, the 35-year-old onetime AC/DC fan and aerospace engineer will run the $700 billion Treasury Department program to rescue the American economy by pricing, buying and, hopefully, reselling some of the most complex financial instruments ever devised--all so that the credit markets can function again. Kashkari's job is pivotal; how long Kashkari will hold on to it isn't clear. Treasury Secretary Hank Paulson intends to work with whoever is elected Nov. 4 to name a permanent head of the rescue program, get that person confirmed by Congress and install him or her on the job as soon as possible.
For a position this important, Kashkari, the American-born son of Kashmiri immigrants, may seem an unlikely pick: he's been in finance for only eight years, two as a student at the Wharton School and four as an executive in the San Francisco office of Paulson's old firm, Goldman Sachs. At Goldman, Kashkari was so low on the food chain that he only got to know Paulson well after they both moved to the Treasury in 2006.
But Kashkari, who grew up outside Akron, Ohio, has been neck deep in the mortgage mess for the past year. In the summer of 2007, Paulson tasked him with assessing plans to untangle the housing mess, and this year he launched a program to funnel money to struggling mortgage holders facing foreclosure. Though Kashkari is a Republican who gave $2,000 to George W. Bush's 2004 re-election campaign, a spokesman for Congressman Barney Frank, the liberal head of the House Financial Services Committee, calls him "very knowledgeable and very smart."
Kashkari is part of a little-known boarding party Paulson brought to Washington two years ago. It included Kashkari's boss, Anthony Ryan, 45, the acting Under Secretary for Domestic Finance, who's been in charge of keeping track of all the new debt taxpayers have assumed recently, including open-ended loans to financial institutions and companies. They joined Kashkari's counterpart at the Office of Financial Institutions, David Nason, 38, who has been overseeing the titanic nationalization of Fannie Mae and Freddie Mac, as well as the broad new program insuring money-market funds announced Sept. 19.
But even Paulson's team of whiz kids is struggling to keep up with the biggest financial crisis the U.S. has faced in more than 75 years. Kashkari must quickly figure out how to spend the first chunk of the $700 billion to maximum effect. He's looking at devices like a reverse auction, where holders of bad loans will compete to sell them to Treasury at the lowest cost to taxpayers. And he has to figure out how to extract from sellers not just complex debt vehicles like mortgage-backed securities but also plain old faltering home loans with local banks, without vacuuming up every loan in the country. If these approaches don't work, Kashkari and the rest of Paulson's team will need a Plan B. And fast. It's a tough assignment for a temp.