A Goldman Sachs Group alumnus in charge of the nation’s economic rescue? How unusual.
Except, of course, it isn’t. As The Wall Street Journal’s Deborah Solomon reported today, Treasury Secretary Hank Paulson is promoting Neel Kashkari, the Treasury’s assistant secretary for international affairs, to be the point man overseeing the $700 billion financial bailout as the interim head of Paulson’s Office of Financial Stability. The full appointment would need Senate confirmation, which is unlikely to come given the short remaining tenure in this Administration.
The move essentially puts a new title on what Kashkari he has been doing since he joined Treasury in 2006–examining the consequences of an economic housing fallout. Kashkari was one of three Treasury staffers–including general counsel Robert Hoyt and head of legislative affairs Kevin Fromer–who stayed up until 4 a.m. last Sunday putting together the $700 billion bailout bill that was shot down by House Republicans the next day.
Kashkari (above left) is an Indian-American who has a few things in common with Paulson (above right). Both are former Goldman Sachs bankers, though Kashkari, at 35 years old, is much younger and was just a vice president-level banker in Goldman’s San Francisco technology banking effort when Paulson tapped him to join Treasury. Both also are Midwesterners. Kashkari grew up in Stow, Ohio, and earned a bachelor’s and master’s degree in engineering from the University of Illinois at Urbana-Champaign. Paulson was raised in Barrington Hills, Ill. And both sport similar hairstyles– or lack thereof.
Kashkari didn’t take a conventional route into banking. He started out as an aerospace engineer at TRW, developing technology for NASA projects like the James Webb Space Telescope, the replacement to Hubble, which is scheduled to launch in 2013.
He earned an M.B.A. at the University of Pennsylvania’s Wharton School of Business. While there, one of his professors was Michael Useem, who liked to put students through grueling, Outward Bound-type strengths of endurance and strategy. Kashkari participated in one Army simulation in 2002 at Fort Dix, where he was quoted in this 2002 Philadelphia Inquirer article in a comment just as applicable to today’s financial crisis as the project he was working on: “We were all taught to play nice,” Kashkari said. “So who’s going to fight in the sandbox?”
After Wharton, Kashkari joined Goldman and worked in San Francisco, where he advised companies that create computer security programs like antivirus software. He and his wife, Minal, still keep a house in California.
Paulson likes to surround himself with people he’s comfortable with: people, mostly, from Goldman Sachs. Paulson’s inner circle already includes former Goldmanites Dan Jester, a financial institutions banker, and retired banker Steve Shafran, who focused on corporate restructuring at Goldman. It also included Robert Steel, who has since left Treasury to become CEO of Wachovia.
Kashkari’s appointment is another example of how deep those Goldman Sachs ties go. In fact, Paulson himself was recruited by a former Goldman Sachs banker: former White House Chief of Staff Josh Bolten. Bolten overcame Paulson’s reluctance to persuade him to take the job as Treasury Secretary at a time when Paulson was so wary of the job that he declined to meet with President Bush because he knew he couldn’t say no to the President himself. According to an article in The International Economy by Fred Barnes in 2006, Paulson also believed that the Bush administration would not be able to accomplish many financial changes in 2007 and 2008. Kashkari’s new job show just how wrong Paulson was back then.
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