I just went to the Brookings Institution to hear Treasury assistant secretary Neel Kashkari describe his success in organizing the federal government’s bailout program, otherwise known as the Troubled Asset Relief Program, or TARP.
Rather than explain why the program is necessary or defend its accomplishments, Kashkari took the bureaucrat’s route and proudly described his office’s operations. Only 97 days ago Congress gave the Bush administration what Kashkari described as the “authority and flexibility” to address the financial crisis (i.e. do whatever it wants). Kashkari observed that in that time TARP had simultaneously designed programs, hired a staff of 90, acquired office space and implemented a process to evaluate applications from “thousands” of banks eager to receive some of the $250 billion TARP has set aside to become a shareholder in their enterprise. To date TARP’s “Capital Purchase Program” has invested $178 billion in 241 institutions in 41 states, the amounts ranging from $2 million to $25 billion for Citigroup, “a feat that I believe is unmatched in the public or private sectors.”
TARP has further committed to a $4 billion loan to Chrysler, $13.4 billion to GM, $5 billion to GMAC, and $20 billion to the setting up of a Federal Reserve Bank program that will make an additional $200 billion available to support credit cards, student loans, auto loans and small business loans. The Fed program is expected to become operational in February. Kashkari announced that in just the last week, TARP has given out $48 billion: $20 billion to Citigroup, $13 billion to the car companies and $15 billion to other banks.
During the Q&A period, Kashkari was asked how he could better communicate the Administration’s intentions, how he decides which firms to help and how he will measure the program’s success. These were indeed challenging questions, Kashkari agreed.
Kashkari said he was dedicated to establishing a fully operational program that could be easily transferred to the incoming administration. His only advice to President Obama was that if he intends to continue the Bush administration’s bank-buying, er, capital investment program he should make sure that the capital investments are very large.
It’s well known that Kashkari previously worked for Treasury secretary Paulson as a vice president at Goldman Sachs. But I didn’t know that earlier in his career he was a space scientist at TRW developing technology for NASA.