Neel Kashkari
Neel Tushar Kashkari is an American banker, economist, and politician who is the president of the Federal Reserve Bank of Minneapolis. As interim Assistant Secretary of the Treasury for Financial Stability from October 2008 to May 2009, he oversaw the Troubled Asset Relief Program that was a major component of the U.S. government's response to the 2008 financial crisis. A Republican, he unsuccessfully ran for governor of California in the 2014 election.
Born and raised in Ohio, and educated at the University of Illinois at Urbana–Champaign, Kashkari worked initially as an aerospace engineer. After attending business school at the Wharton School of the University of Pennsylvania, he became an investment banker, covering the information technology security sector for Goldman Sachs.
Henry Paulson, the former head of Goldman, and then Secretary of the Treasury, hired Kashkari as an aide. Kashkari was eventually named Assistant Secretary of the Treasury for International Economics and Development. At Treasury, he played a number of roles in the response to the 2008 financial crisis and the subprime mortgage crisis that preceded it, most notably administering the TARP.
Kashkari left government and began working for Pimco in 2009, leading that company's push into the equities market. He resigned from Pimco in January 2013 to explore a run for public office. One year later, he announced his candidacy for Governor of California. He came in second in California's nonpartisan blanket primary but lost the general election to incumbent governor Jerry Brown.
He was named president of the Minneapolis Federal Reserve November 10, 2015, succeeding Narayana Kocherlakota who announced his resignation in June.
Early life and education
Neel Tushar Kashkari was born on July 30, 1973, in Akron, Ohio, to Indian parents. Kashkari's mother Sheila Kashkari, was a pathologist at Akron City Hospital, and father Chaman Kashkari, worked as a professor of electrical engineering at the University of Akron.Kashkari's parents are Kashmiri Pandits, who were both born and raised in Srinagar in the Kashmir Valley, within the Indian state of Jammu and Kashmir and immigrated to the United States in 1964. They settled in Stow, a suburb of Akron, where Neel Kashkari grew up. His parents were well known within the local community of Hindu Americans. His older sister, Meera Kashkari Kelley, is a physician specializing in infectious diseases. Growing up, Neel's parents and sister were liberal, but his free-market views led him to identify more with the Republican Party.
Kashkari attended Stow–Munroe Falls High School before transferring to the Western Reserve Academy. He graduated in 1991 with honors in mathematics and was elected graduation speaker. In 2009, he described his high school grades as not good enough to apply to top-tier universities.
Kashkari earned bachelor's and master's degrees in mechanical engineering from the University of Illinois at Urbana–Champaign. He was the team leader for the mechanical engineering component of the school's entry in the 1997 Sunrayce, a solar-powered vehicle race.
Career
Private sector
After completing his master's degree, Kashkari moved to Redondo Beach in California, and worked as an engineer for TRW Inc., a contractor for NASA. There he worked on a stabilizing component for the James Webb Space Telescope.Kashkari left TRW to enter the Wharton School of the University of Pennsylvania, earning an MBA in 2002. At Wharton he was president of the Finance Club and was part of the student organizing team for the annual Wharton Finance Conference.
Kashkari interned at the investment bank Goldman Sachs during the summer between his two academic years at Wharton. After graduation from Wharton in 2002, he joined Goldman's San Francisco office as an associate covering software companies in the investment banking division. In this role, he was part of the team that advised clients on mergers and acquisitions, as well as other financial matters, until leaving the firm in 2006.
He was a regional finalist for the White House Fellows program.
Treasury Department
In May 2006 President George W. Bush announced his intention to appoint Henry Paulson as Secretary of the Treasury. Kashkari contacted Paulson and asked to join him at Treasury. Despite not knowing Kashkari well, Paulson agreed to meet with him, and much later offered him a job as a policy generalist. Kashkari accepted, and then Paulson remembered to confirm that Kashkari was a Republican. After the U.S. Senate confirmed Paulson, he and Kashkari started at Treasury on the same day. Kashkari was one of several Goldman employees who followed Paulson to Treasury.Kashkari began as a special assistant to Paulson working on energy policy. He and Allan B. Hubbard developed Bush's "Twenty in Ten" plan to promote energy conservation. He also worked on issues related to India, particularly infrastructure development. In November 2007, Bush nominated Kashkari to be Assistant Secretary of the Treasury for International Economics and Development. The U.S. Senate confirmed the nomination in June 2008, and Kashkari was sworn in the following month.
2008 financial crisis
By the summer of 2007, concerns over the credit quality of private-label securitizations, underwriting standards and institutional solvency accelerated. The value of mortgage-backed securities backed by U.S. subprime mortgages declined sharply as it became clear that many of the borrowers would continue to default on the mortgages. This caused a housing glut and the subprime mortgage crisis as the banks holding the mortgages rushed to foreclose the loans. This ultimately intensified into the 2008 financial crisis with broad implications.Kashkari 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 JPMorgan Chase. He was in charge of Treasury's efforts to create a market in the U.S. for covered bonds, whose value would continue to be guaranteed by the issuing bank after the bank had sold them. 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.
TARP
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. The plan was conceived as an alternative to proposals from the staff of the House Financial Services Committee, then led by Democratic Representative Barney Frank.Following the collapse of the investment bank Lehman Brothers on September 15, 2008, the Emergency Economic Stabilization Act of 2008 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 Troubled Asset Relief Program, a $700 billion bailout fund for financial institutions threatened with collapse. Kashkari initially proposed a $1 trillion fund, but Paulson vetoed that number as too large. Kashkari came up with the lesser figure of $700 billion by taking 5% of the $14 trillion in then-outstanding mortgages in the United States.
To administer TARP, the EESA created within the Treasury Department a new Office of Financial Stability to be headed by an Assistant Secretary of the Treasury for Financial Stability, who would be nominated by the President and confirmed by the Senate. However, it also specified that the Treasury Secretary could designate an interim Assistant Secretary 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 running TARP he retained his title as Assistant Secretary for International Economics and Development, but his international affairs responsibilities were delegated to another Treasury official.
Noticing a lack of necessary expertise in investment within Treasury, Kashkari recruited new staff for the program, some from government and others from industry, ultimately hiring about 100 people by January 2009. Kashkari also chaired the five-member investment committee within Treasury that decided which banks would receive TARP money.
With Bush scheduled to leave office on January 20, 2009, following the November 2008 election, Kashkari's appointment was initially viewed as temporary. There were even plans to replace him before Bush left office. However, after Obama won the election, his transition team asked Kashkari to remain at Treasury after the inauguration for a limited period. He left the Treasury Department on May 1, 2009, replaced at the helm of TARP by Herbert M. Allison.
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. Another public critic, Representative Gregory Meeks, later thanked Kashkari for his service. Kashkari also won praise from Paulson and Timothy Geithner, Paulson's successor as Treasury Secretary and Kashkari's boss under the Obama administration. Neil Barofsky, who oversaw TARP within Treasury as a special inspector general, commended Kashkari's commitment to the job but criticized his actions. Elizabeth Warren, who headed TARP's Congressional Oversight Panel, later criticized Kashkari for allegedly promising to focus on smaller banks shortly before Treasury announced additional measures to bail out Citigroup. Kashkari later said that Bush not running for reelection allowed the government to "do things that were deeply unpopular but we knew were the right thing."