Last week, Congress’s oversight panel for the TARP funds confirmed in a report that the Treasury Department essentially has no idea what banks have done with the astronomical sums they’ve been handed.
Given this lack of information, we figured it might at least be helpful to know a bit about a few of the people at Treasury who are in charge of administering the massive program, and what their backgrounds might tell us about the way they’ve gone about it.
As the New York Times reported back in October, many of those people are former execs at Goldman Sachs, the Wall Street behemoth that used to be led by Treasury Secretary Henry Paulson.
Most prominent among those is Neel Kashkari, the 35-year old former Goldman VP who was appointed by Paulson in October as the interim head of the Office of Financial Stability (OFS), which is in charge of implementing the bailout. Kashkari’s role is said by the Times to have “evolved” after Paulson changed the original bailout plan, so that Treasury would invest money directly in troubled banks.
But less attention has been paid to another Goldman alum, Kendrick Wilson, who was brought in — after a personal call from his old Harvard Business School buddy, George W. Bush — to advise Paulson on how to fix the financial markets.
Paulson brought Wilson to Goldman in 1998 from Lazard Freres. Before that, Wilson was president of Ranieri & Co., which was established by Lew Ranieri. While at Solomon Brothers in the 1970s, Ranieri pioneered mortgage-backed securities, the exotic financial instruments that helped stoke the mortgage bubble. In other words, the man brought in to fend off a financial crisis appears to be a protege of one of the men who helped cause it.
Wilson’s imprint has been on many major deals of the current crisis. As part of Goldman’s team, he advised National City on its recent investment led by Corsair Capital. Wilson also advised Bank of America on its takeover of Countrywide Financial. He is advising Wachovia on its options for its loan portfolio.
And get this: because Wilson was hired by Treasury as a contractor, he won’t have to file his financial holdings. So there’s no way to know how much stock in Goldman he holds.
According to a Goldman spokesman, Wilson retired from the firm when he signed on with the Treasury. Some news reports over the summer said that Wilson was supposed to stay at Treasury only until January 1 2009. We asked the department whether Wilson is still there, and will let you know what we find out.
But Wilson is far from the only top bailout official who hasn’t received the attention he or she deserves. Another senior adviser to Paulson, according to the Times, is David Nason, the department’s assistant secretary for financial institutions. Before that, Nason served as lead counsel to SEC commissioner Paul Atkins.
Who is Atkins? Portfolio magazine described him in October as the commissioner who pushed hardest to limit the agency’s regulatory scope. A friend of Atkins’ told the magazine: “If you surprised Paul and asked him what he really thinks of the S.E.C., he’d probably say, ‘Blow it up.’ ”
And now Atkins’ former top lawyer is advising Paulson on the bailout.
Then there’s Robert Hoyt, described by the Times as having “worked around the clock in recent weeks to make sure the department’s unprecedented moves pass legal muster.”
As a White House associate counsel before he came to Treasury, Hoyt appears to have been a bit player in the US Attorney firings scandal. According to an Associated Press story, (via Nexis), at the request of DOJ’s Kyle Sampson, the point man on the firings, Hoyt called the GOP co-chair of a committee that vetted judicial applicants in Washington state, pushing the application of John McKay, one of the US Attorneys who ultimately was fired. (McKay was not ultimately appointed to the bench.) Needless to say, Hoyt didn’t raise a peep in protest at the firings scheme.
And overseeing Treasury’s public response to the crisis has been Michele Davis,
a former “senior vice president of regulatory policy,” in other words, a lobbyist, for Fannie Mae — the troubled mortgage giant whose collapse helped precipitate the crisis. Before that, the woman running PR for a $700 billion government program was an aide to Dick Armey, the former GOP congressman and small government champion.
It’s also worth noting a few more of the top Treasury officials running the program — even those with less eyebrow-raising backgrounds.
James Lambright, TARP’s interim chief investment officer, was head of the Export-Import Bank of the US since 2005, and before that was at Credit Suisse, where he specialized in real estate banking. While at treasury, Lambright retains his position as head of Ex-Im Bank.
Lambright’s former colleague at the Export-Import Ban, Howard Schweitzer, is now the TARP’s chief operating officer.
Don McLellan, who, according to a recent speech by Kashkari (via Nexis) is serving as the TARP’s Capital Purchase Program Manager, is a former senior VP at Motorola, specializing in mergers and acquisitions, private equity investments, corporate restructurings, and IPOs.
Another former Goldman alum also advising Paulson is Dan Jester, who is said to be an expert in financial institutions. According to the Wall Street Journal, Jester played a key role in shaping the takeover of Fannie Mae and Freddie Mac.
And Steve Shafran, yet another former Goldmanite who forged a tight relationship with Paulson while in Asia for the firm in the 1990s, has been helping to shape the Treasury’s effort to guarantee money market funds, among other things. Before he retired from Goldman six years ago, Shafran was an expert in corporate restructuring.