After Months on Hot Seat, Bailout Director Nears Exit

By David Cho
Washington Post Staff Writer
Wednesday, April 29, 2009

The first time Neel Kashkari, the head of the Treasury Department's bailout operations, was called to testify before an oversight committee on Capitol Hill, he placed an index card on the table in front of him with the words: "The louder he yells at me, the calmer I will be."

Indeed, the chairman of the committee, Rep. Dennis J. Kucinich, laid into Kashkari repeatedly over nearly four hours.

For the past six months, Kashkari, has been a face of the government's financial rescue and a sponge for congressional anger over the program. Although he scrambled to get the rescue's operations running, often sleeping in his office and working seven days a week, during hearings lawmakers questioned his competence. Rep. Elijah E. Cummings (D-Md.) once called him "a chump."

As Kashkari prepares to leave the Treasury -- Friday is probably his last day, he says -- some of the Democrats who excoriated him during hearings acknowledge that Kashkari played a vital role in arresting a meltdown of the nation's financial system.

"Don't take it personally," Kucinich (D-Ohio) told Kashkari behind closed doors after grilling him during a separate marathon session on Capitol Hill, according to people who were present. "I think you're doing a great job."

Kashkari, a Republican who had aspired to work in the Bush White House before coming to the Treasury in 2006, also got high marks from Obama officials for quickly building a financial rescue operation, which is now up to 135 staff members and growing.

"I deeply admire the guy," Treasury Secretary Timothy F. Geithner said in an interview. "I think he's a person of integrity. He's creative, pragmatic and gets stuff done. I think he's an A-plus public servant."

Kashkari, who was named interim assistant secretary for financial stability under Bush and continued on a temporary basis in the Obama administration, leaves behind programs that have intertwined the government more deeply with the financial sector than perhaps ever before.

"No question it was a trial," Kashkari said of his time at the Treasury. "But I'm incredibly fortunate to serve at this important time in our history, no question about that. I also learned about myself, how to bring a team together and to get the team to perform under unbelievably trying circumstances."

But some lawmakers say Kashkari and former Treasury Secretary Henry M. Paulson Jr. sullied the government's rescue efforts because they focused on bailouts for Wall Street, but failed to explain their actions well or keep big banks accountable for how the firms used government money.

Kashkari acknowledged that public relations was the issue that the Paulson team "struggled with the most." In the fall, the Treasury's objective was to keep the financial system from collapsing, Kashkari said. But the team failed to clearly explain how it was spending the money.

"Explaining our actions and our rationale is by far the hardest thing we've had to do because these programs are so complicated," Kashkari said. "We definitely could have done that better."

At 35, he has built an enviable résumé. A former aerospace engineer who used to design NASA satellites, Kashkari went to business school and got a coveted job at a Goldman Sachs office in San Francisco. He applied for a prestigious White House fellowship, but in 2006, when he heard that Paulson was going to Washington, Kashkari called his former boss and said: "If you are putting together a team, I want to come with you." The two men started at the Treasury the same day.

Paulson said he did not know Kashkari well at first, but quickly noticed his intelligence and boldness. During Kashkari's first meeting in the White House with President Bush and his senior team, Paulson had expected Kashkari to sit quietly and observe. Instead, when a senior member of the president's team asked a question about energy policy, Kashkari piped up from one of the back rows with the answer.

"He's got a lot of courage, a very strong leader," Paulson said. "I think the story that hasn't been told is how Neel built out the [financial rescue] group at the same time we were developing programs. It was it was a real challenge, and I think Neel was very adept at it."

After Congress approved the $700 billion bailout package in October, Paulson tasked Kashkari with building the operations. But Kashkari faced a basic problem: The Treasury had a lot of staffers who could develop and write policy papers, but not many who could be part of a new government investment initiative.

Kashkari began to recruit senior officials from across Washington and industry. At first, many applied to join an effort to solve one of the greatest financial crises in generations. But some, after grasping the grueling hours and pressures of the job, withdrew their names.

Kashkari planned to leave when the new Democratic administration took over in January, along with the rest of the Paulson's political appointees. But Geithner asked him to stay on to make sure there would be a smooth transition.

Now that he is facing his last days at the Treasury, Kashkari said part of him finds it hard to leave "because the mission is not finished." But with his replacement, former Fannie Mae chief executive Herbert M. Allison Jr., now at the Treasury and awaiting confirmation, Kashkari said he can safely step aside.

He said he has no immediate plans except to disappear with his wife for several months to their cabin near Lake Tahoe.

"I don't think any of us could see what this job was going to entail," said Don McLellan, a former Motorola executive Kashkari recruited to develop the program for injecting public money into banks. "It was like asking Neel to jump off a high dive, and I don't think any of us could have told him whether there was water under him."

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