Paulson Adviser To Oversee Rescue
Monday, October 6, 2008
The Treasury Department plans to tap Neel Kashkari, an assistant secretary of international affairs and a former Goldman Sachs banker, to oversee the government's $700 billion financial rescue program, sources familiar with the situation said yesterday.
Kashkari has been a close adviser to Treasury Secretary Henry M. Paulson Jr. on the credit crisis and helped draft the legislation for the massive rescue plan. He is expected to run the program on an interim basis until the Treasury finds a permanent head, according to sources who spoke on condition of anonymity because they were not authorized to comment. Kashkari's replacement would stay on after the next administration takes office in January.
Treasury today will begin the hiring process for five to 10 asset managers and release guidelines for how it will manage conflicts of interests for contractors who work for the program, the sources said. Officials, however, do not expect the purchase of assets to start until at least the middle of November.
Under the program, the Treasury will buy troubled assets from financial institutions, many of which have large holdings in mortgage-related securities.
Industry sources said Legg Mason, Pimco, BlackRock and MKP Capital Management are strong candidates as asset managers because of their expertise in mortgage-related securities. But hiring asset managers from such firms would raise the potential for conflicts of interest; the managers would be overseeing the assets while also selling their own troubled securities to the government.
Kashkari is among a small and influential group of former Goldman Sachs bankers who advise Paulson, himself the chairman of Goldman Sachs before coming to Treasury.
A former vice president at Goldman, Kashkari led the firm's security investment banking practice.