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Originally published Sunday, December 20, 2009 at 12:07 AM

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Federal bailout chief bails out

He wears no coat though it's freezing, shines no light though it's near midnight, carries no shotgun though he's tramping on the pine-needled tracks of black bears.

The Washington Post


He wears no coat though it's freezing, shines no light though it's near midnight, carries no shotgun though he's tramping on the pine-needled tracks of black bears.

He wants to be lost in these woods.

"Come on, you bums," Neel Kashkari calls to his dogs, two giant Newfoundlands. "Boys, let's go."

He is walking through the smoke of a controlled burn in the Sierra Nevada. He is talking about the people and the life he left behind in Washington, D.C.

His BlackBerry rang once today. A year ago in D.C., it buzzed every few seconds.

"It's like a dream," Kashkari said. "Sometimes I think: Was it real?"

It all began as it ended: Abruptly. Kashkari was a 35-year-old business-school graduate who had gone to Washington, D.C., in 2006 to learn how government worked.

Then came the recession, and through a freakish set of circumstances mixing pluck, cataclysm and luck, he was appointed by Treasury Secretary Hank Paulson as the federal bailout chief.

Kashkari suddenly was in charge of $700 billion.

Congress savaged him. Wall Street Journal editorials doubted him. Hometown buddies in suburban Akron, Ohio, urged him to use the money to buy the Cleveland Browns and fire the coaches. He lost sleep, gained weight and saw a close adviser, Don Hammond, suffer a heart attack at his Treasury desk. On May 1, after serving seven months under Presidents Bush and Obama, he resigned.

Within a week, Kashkari and his wife, Minal, put their belongings into "indefinite storage." They moved to a cabin near the Truckee River in Northern California. "Off the map," he told friends. He threw away his business cards and made a list of the things he wanted to do:


1. build shed

2. chop wood

3. lose 20 pounds

4. help with Hank's book

He called his four-step program "Washington detox."

Now, six months later, he is almost done. He is nearly better, nearly free of D.C. Tonight, Kashkari is walking his dogs on a mountain, listening for the coyotes that sometimes shadow him. The wind washes through the treetops. It sounds like rushing water. Kashkari pivots between two thick, rough trunks. He turns sharply and opens his hands into the darkness:

"This makes $700 billion seem small."

Build shed

Hank Paulson announced in October 2008 that the government-rescue operation, the Troubled Assets Relief Program (TARP), would be run by his aide, Neel Kashkari. The choice was met with considerable surprise. Who was Neel Kashkari? He was too young, too inexperienced and had ties to Wall Street, detractors said.

Overnight, Kashkari became the face of the biggest, and one of the most controversial market interventions in U.S. history.

One year later, Kashkari is dressed in sap-stained jeans and a Cleveland Browns T-shirt, whistling in the lumber aisle at a Home Depot in Reno, Nev.

He is shopping for boards to finish his shed.

He rubs the scruff on his chin and takes out his BlackBerry.

In D.C., he used his BlackBerry to determine the bailout sum presented to Congress. His arithmetic: "We have $11 trillion residential mortgages, $3 trillion commercial mortgages. Total $14 trillion. Five percent of that is $700 billion. A nice, round number."

Looking back, he says, he is more confident about the two-by-sixes needed for the shed.

"Seven hundred billion was a number out of the air," Kashkari recalled. "It was a political calculus. I said, 'We don't know how much is enough. We need as much as we can get [from Congress]. What about a trillion?' 'No way,' Hank shook his head. I said, 'OK, what about $700 billion?' We didn't know if it would work. We had to project confidence, hold up the world. We couldn't admit how scared we were, or how uncertain."

At the Home Depot checkout counter, Kashkari pays $157 for his lumber. He loads it onto his truck and drives into Tahoe National Forest, climbing to 6,500 feet. The paved road turns to dirt at his cabin.

Beginning of design

The shed stands in an old horse corral. He began designing it in his mind on Christmas Eve when incoming Treasury Secretary Timothy Geithner asked him to stay for the new administration. Kashkari didn't have anything to store in a shed, but he knew, right then, that he needed to build it:

"I had to do something with my hands. It's a big amorphous unknown — what's going to happen to our economy. And the shed is solid, measurable. I can see it; I can touch it. It's going to be around for the next 30 years. It's the opposite of amorphous."

It looks like a small country church. "The Anti-D.C. Sanctuary," he calls it.

Kashkari raises his ax to split logs to feed the stove for winter.

"It felt like I got jumped."


"Like three guys beat the crap out of me."

Whack, whack.

The massive block of sugar pine breaks, the crack bouncing off the mountain.

Kashkari recalled his testimony before Congress.

"Members of Congress will tell you they agree with you, and then in public they blast you. I understand their anger, but the playing at politics when so much was at stake — "

Whack. The ax blade flies off its wooden handle.

In one House session, Rep. Gregory Meeks, D-N.Y., opened with a round of criticism, and then a Republican finished him off, suggesting that Kashkari resign.

"I wasn't prepared for their hostility."

His route to a Hill hearing room tracks back to June 2006. He was a tech banker at Goldman Sachs in San Francisco. Paulson, the chief executive, was named Treasury secretary. Kashkari called Paulson, who didn't know the low-level employee, and asked to go along.

Five rush-altered Macy's suits, an 80 percent pay cut and 10 days later, Kashkari was sworn in as Paulson's aide. He was an engineering nerd working for a man who'd been a star offensive lineman at Dartmouth, whom he considered "the Joe Montana" of the business world.

As Kashkari drove to Treasury, he coached himself, "Don't try to score a touchdown. Just — if Paulson throws the ball — catch it."

In February 2008, that meant drafting an emergency plan in the unlikely event of an economic meltdown. Kashkari and a colleague wrote, "Break the Glass: Bank Recapitalization Plan." When the banks actually tanked later that year, the 10-page plan laid the basis for TARP. Amid the chaos, Kashkari was appointed czar.

"When I first got to Washington, I tried teamwork, consensus-building," he said. "But even before the crisis, I realized it doesn't work like that in D.C. "

"Pure therapy"

At Truckee Mountain Hardware, Kashkari picks out a new ax, a heavier one with a fiberglass handle. "Pure therapy," he said, hoisting it.

At the Truckee gym on Donner Pass Road, Kashkari steps onto a digital scale.

"Let's see," he said, as the black numbers pulsed.

Kashkari, about 5-foot-10, had ballooned in D.C. — "I'm a stress eater" — to 203 pounds.

Washingtonian magazine voted the "bailout czar ... a person we'd most like to have over for drinks, good food and conversation." His actual lifestyle: dining at his Treasury desk on family-size Cool Ranch Doritos.

Now, after six months of dieting and 45-mile alpine bike rides, the gym scale under Kashkari's sneakers reads: 181.2.

"No dinner tonight," he grumbled.

"Are you detox'd yet?" A friend had messaged.

Not until he weighs 180.

Colleague's story

Tonight, Kashkari is lifting weights. He tells the story of Don Hammond. Overnight, Kashkari had to create 135 TARP positions. Hammond was on the 12th hole of the golf course when Kashkari called to recruit him as chief compliance officer: "Can you be here in an hour?"

Kashkari was managing a team of mostly older career bureaucrats. Hammond, 55, a jovial man with 23 years' experience at Treasury, was Kashkari's "confidence builder": "In meetings, I'd look over at his face for signs of concern. If his eyes crinkled, I'd say, Wait, Don — what are you thinking?"

Hammond worked beside Kashkari, 18 hours a day, for 40 consecutive days. Then, after submitting a TARP report, he admitted to himself what he'd been denying: burning pressure in his chest.

"He was pale in the ICU. All these tubes in his nose and his arms," Kashkari said, recalling his hospital visit after Hammond's heart attack. "He was tilted up in bed. He asked about my upcoming House testimony. He said, 'I'll be checking my BlackBerry, if you need anything.' "

Meeting convened

Kashkari convened his chiefs that evening, a Sunday: "We need to divide Don's work and keep going." The civil servants worked all night, he recalled: "I saw a 60-year-old man pull an all-nighter. In one of the worst times in American history, I saw the best in people coming together to put out the fire."

Later that week, when Kashkari testified before the Financial Services Committee, Hammond and his wife watched from the hospital bed. Meeks, the Democratic congressman, demanded to know why the secretary "has not moved to do anything" to prevent foreclosures. Other lawmakers grilled him for nearly six hours. "You can't ask him that question!" Hammond shouted at the screen. "You have to calm down," his wife said, glimpsing the heart monitor, "or we're turning off the TV."

"My friend almost died," Kashkari said. "But he survived, and he's OK. And I'm making sure I'm as strong or stronger, as a way of saying Washington tried to break us, but it didn't."

Kashkari steps off the plane at D.C.'s Reagan National Airport.

His bag bulges with manuscript pages from "On the Brink." Paulson was bringing him back for his first visit since he quit in May, to help with the final read-through of Paulson's book.

Near the taxis, Kashkari runs into Meeks. Last time they met, at a hearing, the congressman was the one asking questions.

"How are things going in Washington?" Kashkari said politely.

"Barney Frank is drafting new regs for the financial system," Meeks said. "We gotta make sure this doesn't happen again."

The congressman edged away awkwardly: "Thank you for what you've done."

In the taxi, Kashkari rides past the Washington Monument and the White House. "I'm so happy not to live here," he said. "Zero longing."

He had disbursed more than $400 billion, invested in 540 banks, implemented a $50 billion foreclosure prevention plan. He made People magazine's "Sexiest Men Alive" issue.

Mistakes made

And he also made mistakes — a punitive interest rate on the American International Group (AIG) intervention, he said, and a clause allowing unilateral changes to the Capital Purchase Program contracts — decisions executed quickly in the crisis and recognized belatedly by him on the road to Lake Tahoe, while biking up a 9 percent grade, his thoughts grinding round.

The next morning of his D.C. visit, he knocked on Paulson's front door.

"Neel," Paulson said warmly. "You're a different man."

"I lost 18 of the 20 pounds."

"Almost there," Paulson smiled. "I remember when you were here in April, and you were fat."

"And unhappy."

Book edited

They edited "On the Brink" for the next five hours. In the book, Paulson describes Kashkari as "talented and self-confident." Through Paulson's narrative, Kashkari, too, hopes to reclaim his story, to rebut the Facebook page titled "Neel Kashkari Is a Traitor" and the bloggers who called him "Cash-n-Carry."

He tells Paulson about a job offer he's gotten in financial services and that he feels ready to start work before the end of the year.

Later, he meets a friend from the Federal Reserve for lunch. He'd spent every weekend working with him when the economy was in free fall.

"That's the thing," Kashkari blurted across the table. "I started praying when I came to Treasury. At Goldman, I didn't pray. Not once. 'Cause I just didn't care. At Treasury, there were so many times."

His friend was silent.

"That's really personal," Kashkari said of his Treasury prayers. He said he'd like to take it back.

There rests the center of Kashkari's tension. He loathes this city. Yet, his work was meaningful. It penetrated him so deeply that he learned to pray: "God, we need you." "Help Don make it through." "God, help me do my best, so I can catch the ball."

In D.C., it mattered — and that, perhaps, is all that matters.

Two weeks later, Kashkari was back in the Tahoe forest with Minal. They talked about the chipmunks nesting in their dryer vent and the two-mile drive to their garbage cans. They can see shooting stars every night, but they can't get Wall Street Journal home delivery.

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