Despite its colossal scale, the bailout boils down largely to one individual's actions, writes Arthur Beesleyon Wall Street
NEEL KASHKARI is the $700 billion man. Chosen by the US government to manage its controversial bailout programme for the US banking system, the 35-year-old Indian-American has one of the biggest cheque-books in the world at his disposal. His task, however, is a mammoth one.
As the Bush administration enters its final weeks engulfed in a financial maelstrom that has reshaped the landscape of international capitalism and led some of its brightest luminaries to ruin, Kashkari is charged with cleaning up the mess. Easy it will not be.
With stock markets in uproar even after the bailout Bill became law last Friday, there are many who question whether the scheme can avert recession in the US. If that arises, and it's looking more likely by the day, people throughout the world will feel the consequences as business slows down in their economies.
Kashkari brings considerable intellectual and commercial pedigree to his new job. He trained as an aerospace engineer and worked for Nasa before changing course to take an MBA in finance at the prestigious Wharton School of Business at the University of Pennsylvania. His second career took off very smoothly - he quickly secured a job with Goldman Sachs, the investment bank.
It was there that he met Hank Paulson, who held the top seat in Goldman before entering government two years ago after his retirement from business. Kashkari was a vice-president in Goldman's San Francisco office when Paulson invited him to join his team in the treasury as special adviser.
He duly signed up, swapping work as an adviser to companies that create anti-virus computer software for a well-placed seat at the epicentre of political power. Kashkari quickly became one of Paulson's most trusted lieutenants.
He is not the only Goldman alumnus on the team, which was expanded in recent months as the credit crisis worsened. Seven officials with a background in Goldman now work for Paulson. In private at least, rival Wall Street firms have expressed concern about the extent of Goldman's indirect influence over the treasury through former executives.
Some observers have criticised the manner of Kashkari's selection, and pointed to his youth. But his talents are recognised by Democratic Congressman Barney Frank, chairman of the House financial services committee and a crucial figure in the political debate about the bailout.
"He's a very smart person. He certainly has a lot of trust put in him by the treasury secretary," said Frank's spokesman, Steven Adamske.
"Even though they've chosen someone in-house, and who worked with Paulson at Goldman, there are backstops and double-checks to monitor what they are doing with the taxpayers' money," he told The Irish Times.
Kashkari had little public profile to speak of in his time at the treasury, where his official title until this week was assistant secretary for international economics and development. However, he came to prominence as the government struggled to hammer out the bailout plan with a reluctant Congress. In a fortnight of fevered political negotiation, during which talks frequently continued into the early hours, he was rarely away from Paulson's side.
Having played a crucial role in the design of the controversial plan, it now falls to Kashkari to execute the scheme.
"The job is going to be quite a demanding one," John Carey, an executive vice-president with asset management firm Pioneer told The Irish Times. "It's a complex and delicate task, deciding what to buy and from whom at what price, then figuring out what to do with the paper after you have it. It's going to be a very, very crucial position."
While the government may not start buying up the toxic mortgage assets for some weeks, it moved quickly to jump-start the process by giving financial institutions only two days to submit their proposals to work as asset managers in the scheme. Big asset managers such as Pimco, Blackrock and Legg Mason are expected to bid for this business, as are banks such as JPMorgan Chase and Morgan Stanley. The deadline for applications falls this evening.
Kashkari will bear huge responsibilities, but he holds his job only on an interim basis. This was necessary because a permanent appointment must be confirmed by the Senate, now in recess ahead of elections in November. Paulson has already signalled his intention to leave government when the new president is sworn in next January.
Whether Obama or McCain asks Kashkari to stay on may well depend on his performance in the coming days and weeks. In addition to that fat cheque-book, he has rather a lot on his shoulders.
