A Portrait of the $700 Billion Man as a Young Banker

suchandra · October 13, 2008

Kashkari comes from a small, tight-knit community of Indian Hindus in Ohio, where his parents had a high profile in the local community.

A Portrait of the $700 Billion Man as a Young Banker

Heidi N. Moore – The Wall Street Journal October 10, 2008

Who is Neel Kashkari?

We’ll get to that in a second. Here is who he is not: Neel Kashkari is not a wunderkind. He’s not an evil genius. He’s not a mastermind.

Kashkari, the 35-year-old interim head of the Office of Financial Stability, has been the source of great worry. Many fear he’s too young and too inexperienced to handle the task of rebuilding the nation’s financial system.

Of course, Kashkari may just have the job for a few months. Paulson made clear he will appoint somebody and try to get the new person confirmed in November, and that person would transition into the next administration.

Forty-five days isn’t a long period in normal times, but in this crisis it’s an age. To get a better understanding of him, Deal Journal spoke to people who knew Kashkari well in his childhood and during his time at Goldman Sachs to find out the character and working style of the man who is managing the nation’s bailout.

Neel Kashkari

Here’s the portrait that emerged: Kashkari is smart, dutiful, detail-oriented, and takes orders well. In the parlance of investment banking, he is a good “execution guy”: He leaves strategy to the bigwigs. But if you give him a project, he will prioritize, delegate and finish it.

These people report he has an amiable manner and is a good, intent listener. He doesn’t make waves and never dominates a discussion; he thinks before he speaks and he lets people express themselves. He is particularly good at presenting complicated ideas and leading team projects that depend on gaining cooperation from others. Those include the Sunrayce project to build a solar car as well as his work on the space telescope. “Neel is just plain good, with a high standard of ethics,” said Dr. Surinder Bhardwaj, a Hindu community priest who is a close family friend to the Kashkaris in Ohio. “This is a responsibility that requires the interest of the nation as a whole, and requires a very strong base of morality, which he has.”

Kashkari comes from a small, tight-knit community of Indian Hindus in Ohio, where his parents had a high profile in the local community. His mother, a pathologist, was known as a community resource. “She’s a good listener and helps guide people out of stressful situations,” said Dr. Bhardwaj. “They are very compassionate people, his parents, and maybe that’s where he’s getting his value system from.” Kashkari’s father is a retired engineer with a bent to public service, particularly in West Africa, where he spearheaded efforts to bring electricity and clean water to poor villages. Kashkari met his wife, Minal, in college at the University of Illinois Urbana-Champaign. They were married in a traditional Indian ceremony in Chicago where participants remember the bride being carried in on a festive palanquin and Kashkari, busy even then, taking the time to put each guest at ease.

Kashkari first worked at Goldman Sachs during the summer between his two years at Wharton, and impressed well enough to get a full time job after graduation. Academically, Kashkari was not outstanding, said a person familiar with the matter, but he appealed to Goldman’s recruiters because, as a former engineer, he was different than the usual aspiring investment banker. Kashkari’s head – shaved bald even then – also differentiated him from the reigning Goldman aesthetic, sometimes mockingly referred to as “The Borg” by rivals. “Everyone at Goldman has a full head of hair and went to prep school and Dartmouth and played lacrosse. That’s not Neel,” said an investment banker who knew him.

Goldman’s investment bankers were most impressed by Kashkari’s science background. His experience working on the James Webb Space Telescope for NASA contractor TRW gave him a comfort with technological jargon that would help Kashkari communicate with technology-company executives. Kashkari also spoke passionately of his entry in a car competition, the 1997 Sunrayce event in which Kashkari’s team built and raced a solar-powered car. His team didn’t win, but it did earn kudos. While other bankers at Goldman would often discuss their project du jour or details of a presentation even in their off-time, Kashkari often discussed cars and the Sunrayce experience.

When Kashkari returned to Goldman Sachs after business school, he worked with senior bankers advising companies in the software sector. As a junior banker, he did not have many responsibilities of his own; it was his job to prioritize and execute on the tasks given to him by others. (In many ways, that has also been Kashkari’s job at Treasury, where the strategy has been set by Hank Paulson.)

Kashkari did well enough that his bosses gave him an obscure sector to research and cover : information technology software, which included antivirus-program makers. The sector included many tiny companies that rarely hired or needed investment bankers, and Goldman Sachs did not have meaningful relationships with the leading companies. Kashkari impressed colleagues with his technical skill. Much of his job, however, was building relationships, a task that, in the world of investment banking, takes years. Although a few mergers and financings emerged from his work, many were not publicly disclosed because of their small size.

After Kashkari had spent only a couple of years covering IT software, the head of Goldman Sachs’s technology group, George Lee, recommended him to Paulson, who had then moved to Treasury.

“I never thought I’d see him in government,” said one banker who knew him. “He enjoyed being a banker and the respect that was conferred on him as being a Goldman banker.”

The rest, as they say, is history.

http://blogs.wsj.com/deals/2008/10/10/neel-kashkari-a-portrait-of-the-700-billion-man-as-a-young-banker/

suchandra · October 14, 2008

Kashkari Leaps From Obscurity to Lead Role in Rescue

Robert Schmidt and Rebecca Christie – Bloomberg October 14, 2008

Minutes before Neel Kashkari's public debut as the chief of the U.S. Treasury's financial rescue plan, he sat in a hotel lobby in Washington, unrecognized by many of the international bankers gathering to hear him speak.

Kashkari speaks to the Institute of International Bankers Monday night

By the time Kashkari finished his 21-minute address yesterday, laying out Treasury's first concrete details of the $700 billion bailout, a swarm of television cameras and reporters followed him out the door.

In less than two weeks, the 35-year-old former Goldman Sachs Group Inc. banker has risen from obscurity to center stage in the U.S. financial crisis. He has been given extraordinary latitude, and not much time, to set up an organization and procedures for carrying out the Treasury's counteroffensive on the market meltdown.

Kashkari and Treasury Secretary Henry Paulson are ``doing this on a wing and prayer, and it's all happening quickly,'' said Paul Light, a professor at New York University who studies the federal bureaucracy. ``There is such pressure to get it done that I think all rules are out.''

Paulson today announced plans to provide $250 billion in capital injections to banks ``to restore confidence in our financial institutions'' and urged the banks to use the funds to spur economic growth.

As head of the new Office of Financial Stability during the final months of George W. Bush's presidency, Kashkari is responsible for overseeing the selection of private contractors for Treasury's Troubled Asset Relief Program, hiring permanent government employees for the effort and setting standards that will govern how conflicts of interest are managed.

Months or Years

``A program as large and complex as this would normally take months – or even years – to establish,'' Kashkari said in his speech yesterday. ``We don't have months or years.''

Kashkari's appointment earlier this month drew comment from Wall Street veterans and industry observers because of his youth, his relative inexperience with markets and his ties to Goldman, where Paulson had been chief executive officer.

``It was unfortunate that it was yet another Goldman Sachs person taking the helm,'' said Michael Greenberger, a former official at the Commodity Futures Trading Commission and now a professor at University of Maryland School of Law. ``Essentially it appears that he is turning to the very financial institutions that led to the problems to fix the problems.''

Kashkari worked in Goldman's San Francisco office on mergers and acquisitions in the information-technology industry. He reported Goldman paid him $738,000 in salary and bonus before he joined Treasury in July 2006 as a senior adviser to Paulson, according to his federal financial disclosure form.

Trained as Engineer

Prior to landing a job on Wall Street, Kashkari was an aerospace engineer. He worked to develop technology for National Aeronautics and Space Administration missions, including the James Webb Space Telescope.

The son of Indian immigrants, Kashkari grew up in Ohio and received bachelor's and master's degrees in engineering from the University of Illinois at Urbana-Champaign. He has an MBA from University of Pennsylvania's Wharton School.

Before taking over his current role at Treasury, Kashkari was Paulson's top aide on housing and mortgage issues.

Decisions Are Paulson's

While Treasury officials say Kashkari has been working long hours and weekends to get the troubled assets office established, they also note that major policy decisions are being made by Paulson. One of Kashkari's biggest challenges has been getting the program up and running as Paulson has kept shifting strategies for combating the credit crisis.

The Treasury Department initially proposed a plan for buying toxic mortgage-backed securities from financial firms, and pushed a broad version of the proposal through Congress. Last week, Paulson said he would use his authority under the legislation to have the government take equity stakes in a wide range of banks, the action he announced today.

``Circumstances have changed dramatically'' since the law was signed, said Edwin Truman, former head of the Federal Reserve's international finance division and now a fellow at the Peterson Institute for International Economics in Washington. ``It's become more clear that the economy is headed south.''

Stan Collender, a former analyst for the House and Senate budget committees, said that while Kashkari is well qualified for the job, whoever wins the presidency next month will ``start dealing with the economic crisis the day after election day.''

Paulson, in a statement last week, said he was consulting with the White House, lawmakers and the presidential campaigns of John McCain and Barack Obama to find a permanent head for the troubled asset program. Paulson said he wanted the person confirmed by the Senate, as the law requires, ``as soon as possible.''

www.bloomberg.com/apps/news?pid=20601109&sid=aXXfOxai2E7s&refer=home

AncientMariner · October 14, 2008

I have heard there are 56 to 62 trillion in derivatives and 200 trillion worldwide hanging over the economy like the sword of damocles. At this point everything they have done is just meant to buy them time while they suck the taxpayers dry and kill the dollar off completely.

suchandra · October 15, 2008

I have heard there are 56 to 62 trillion in derivatives and 200 trillion worldwide hanging over the economy like the sword of damocles. At this point everything they have done is just meant to buy them time while they suck the taxpayers dry and kill the dollar off completely.

You mean they installed Kashkari as convenient scapegoat to put the blame on an Indian? And the banking supervision fully aware about the soon arriving fiasco?

Well I was amazed why they took such a young unexperienced engineer, career changer.