Top Treasury aide during financial crisis tapped to run Minneapolis Fed
Neel Kashkari, one of the most public faces of the federal government's response to the 2008 financial crisis, was named Tuesday to be the next president of the Federal Reserve Bank of Minneapolis.
Once an aerospace engineer, Kashkari, 42, moved to the investment world with a job at Goldman Sachs in California before joining the U.S. Treasury Department in 2006 as an aide to then-Treasury Secretary Henry Paulson.
At the height of the 2008 financial crisis, he was named to lead the newly-created, $700 billion Troubled Asset Relief Program, which became widely viewed as the government's bailout of Wall Street's biggest banks.
Kashkari stepped up as the public face of TARP as it came in for criticism for initially helping larger banks first, although Kashkari disputes the idea that smaller institutions were treated unfairly.
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"We needed to put medicine into the economy quickly and the fastest way to do that was to start with the biggest institutions," he said in an interview with MPR News. "Big banks did not get any special deal."
He said he was proud of that work and noted that TARP recovered all the money deployed and generated a $12 billion profit for taxpayers.
After leaving the Treasury, Kashkari returned to California where he ran in 2014 as the Republican nominee for California governor. He lost to incumbent Jerry Brown, who won easily with 59 percent of the vote.
For Kashkari, the Minneapolis Fed job marks a return to public service. One of 12 regional banks in the Federal Reserve System, the Minneapolis Fed supervises and examines bank holding companies and commercial banks across the Upper Midwest from Montana to Michigan's Upper Peninsula.
Regional bank leaders also help set national monetary policy affecting interest rates and credit across the country. The Federal Reserve is legally required to focus on keeping inflation low and employment high.
Kashkari will have a direct hand in that work in 2017 when he gets a seat on the Federal Reserve's Open Market Committee, the policy-making body that directs the nation's monetary policy. Currently, the Federal Reserve Board in Washington, D.C., is under a lot of scrutiny over whether it will raise interest rate at its December meeting.
Kashkari said it was too early for him to talk openly about the direction of rates and when to raise them, he said, "I have a lot of confidence that the Federal Reserve as an organization is going to get that decision right."
The regional Federal Reserve banks also help shape federal monetary policy through research. Although the Minneapolis Fed is well known for the technical work of its economists, Kashkari is not an economist. He said that wouldn't be a problem.
"I know how to work with economists," he said. "I view my role as getting the best ideas out of economists, channeling those into things we can put into practice, and advocating those nationally."
Kashkari will move to Minnesota from northern California where he noted there was already snow on the ground when he left this week. Kashkari, a native of Akron, Ohio, earned his bachelor's and master's degrees in mechanical engineering at the University of Illinois at Urbana-Champaign and his MBA from the Wharton School at the University of Pennsylvania.
He takes over the Minneapolis Fed on Jan. 1, replacing Narayana Kocherlakota, who did not seek re-appointment.