Prometheus 6

I can't help but to see great irony in giving $700 billion to a Goldman Sachs crony named "cash - carry."

The relatively green Kashkari, an Indian American, has ended up with this enormous responsibility because he’s known to have a good rapport with treasury secretary Henry M Paulson with whom he worked in Goldman Sachs when the latter was CEO. In fact, he followed Paulson to the US Treasury Department in July 2006 as Senior Advisor to the Treasury Secretary and has since worked closely with him. Not coincidentally, a major beneficiary of the bailout plan will be Goldman Sachs.

Neel Kashkari:The $700 bn man
BACKSTAGE
Shobhana Subramanian / New Delhi October 13, 2008, 0:27 IST

I am a free market Republican,” Neel Kashkari is believed to have said at an American Enterprise Institute Conference some time back. Well, Kashkari’s job over the next few months can’t really be said to be upholding the spirit of a free market.

Appointed the head of the new Office of Financial Stability in the Treasury department (pending Senate confirmation), the 35-year-old assistant secretary will buy out the bad debts of failing Wall Street institutions.

In a free market, investment banks, brokerages and insurance companies should have been allowed to go bankrupt without the government having to intervene and taxpayers having to make sacrifices to keep them afloat. The consequences of their excessive leveraging should have been faced by their executives who allowed such reckless lending without having adequate capital.

But they’re being let off the hook; apparently Wall Street needs to be rescued so that it can get back to the business of lending and so that credit can flow to households and businesses.

Kashkari was part of the Treasury team that negotiated the asset-repurchase programme with the Congress and is also believed to have been one of the originators of the plan. So he has obviously jettisoned his ‘free market’ views for the time being.