Paulson Advisor to Head Bailout

Treasury Secretary Henry Paulson will appoint one of his chief advisors to manage the repurchasing of securities in the upcoming $700 billion bailout, according to the Wall Street Journal. Neel Kashkari, Paulson’s senior advisor, is also the assistant secretary for international economics and development in the International Affairs branch of the Treasury.

Kashkari will be responsible for heading the Treasury’s securities buyback initiative as described in the bailout legislation. His major task will be to organize the repurchase of the mortgage-backed securities whose failure has widely led to the recent economic crisis. Kashkari must determine which securities to purchase, and which asset managers to enlist to help him do so.

A central argument over the bailout proposal is the potential for conflict of interest in regard to the asset managers assisting in the securities repurchasing. Paradoxically, any asset manager qualified to work with these complex and over-arching financial vehicles will likely have some personal stake in the industry. Kashkari and the Treasury must ensure that the bailout asset managers don’t use their position of power to the benefit of any specific financial firms.

Prior to his service with the Treasury, Kashkari worked at Goldman Sachs as a vice president. He is thirty five years old.