Having just read the book ‘Losing The Signal’ about the meteoric rise and incredible fall of Blackberry, and after watching the movie ‘The Big Short’, about the 2008 financial collapse, I started thinking about an article I read awhile back about a very interesting man named Neel Kashkari.

In 2006, Neel Kashkari was a 33-year-old tech banker at Goldman Sachs in San Francisco with no government experience. Only two years later, through bizarre circumstances and in the shadow of what looked like the cataclysmic economic meltdown of the financial system, he would find himself appointed by Hank Paulson as the federal bailout chief in charge of the US Government’s Troubled Asset Relief Program (TARP) and $700 billion dollars.

Laura Blumenfeld of The Washington Post writes a riveting article that reveals shocking insights into the gravity of the financial meltdown and the degree to which no one knew what to do about it. Blumenfeld writes “Thoughts tended toward the apocalyptic. During midnight negotiations with congressional leaders, Paulson doubled over with dry heaves. A government economist broke into Kashkari’s office sobbing, ‘Oh my God! The system’s collapsing!’” In-spite of this, Kashkari says “We had to project confidence, hold up the world. We couldn’t admit how scared we were, or how uncertain.”

“Thoughts tended toward the apocalyptic. During midnight negotiations with congressional leaders, Paulson doubled over with dry heaves. A government economist broke into Kashkari’s office sobbing, ‘Oh my God! The system’s collapsing!’”


The Secretary of the Treasury having dry heaving from fear? Government Economists sobbing? Despite how much has been written about this over the years, I was amazed to learn just how frightened and uncertain they were. Blumenfeld goes on to write “In Washington, (Kashkari) used his BlackBerry to determine the (total) bailout sum presented to Congress. His back-of-the-napkin 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.”

Regardless of your political views, it’s hard not to feel some empathy for Kashkari who was skewered by the media and became a congressional punching bag. Kashkari was appointed to be in charge of TARP in large part simply because of a 1o page plan called “Break the Glass: Bank Recapitalization Plan” that he had drafted with a colleague while still just an aide for Paulson. The short plan seems to almost be a kind of thought exercise about the unlikely event of an economic crash. When the meltdown actually occurred later that year, and the Treasury needed to do something fast, they turned to Kashkari’s plan as the blueprint for TARP.

Blumenfeld paints a picture of a politically naïve Kashkari as being grossly unprepared for the position that he was thrown into… and of a man who was chewed up and spit out of the Washington machine, resigning 6 months into the Obama administration. Blumenfeld describes how Kashkari would later try to regain his bearing by building a shed in the woods of Northern California with his own hands.

The jury on the effectiveness of TARP is divided. On the one hand, much of the money spent on TARP has now been returned. With interest, dividend payments and other profits related to TARP, the government has actually recognized a $65.3 Billion profit from TARP loans. A study by Allen Berger and Raluca Roman of the University of South Carolina suggests that TARP may have helped save Main Street USA. However, others argue that TARP made things worse, not better. Richard Salsman, a contributor to Forbes, the Economist and the Wall Street Journal argues that TARP had a bearish impact on US financial markets, saying “Instead of U.S. banks shedding bad assets, merging and raising private capital, TARP compelled them to take unwanted, high-cost capital injections with “strings attached” that became a noose around their necks.”

One thing that most people agree on is that the government seemed completely unprepared for what looked like the impending collapse of the financial system, that they were flying by the seat of their pants and that they made a lot of mistakes. The fact is, they didn’t know what to do, and rather than debating and pondering they took decisive action with TARP.

This article has me looking forward to reading Hank Paulson’s book  ’On the Brink: Inside the Race to Stop the Collapse of the Global Financial System’ which delves deeper into what went on behind the scenes of this remarkable crisis. Another book that I’ll be picking up is Andrew Ross Sorkin’s ‘Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves’.

Incidentally, Laura Blumenfeld, is the author of her own well-received novel: Revenge: A Story Of Hope.

Read the full Washington Post article, The $700 Billion Man here.



  1. While Congress originally approved $700 billion for TARP, this amount was later reduced to $475 billion by the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the total amount of disbursements has been $431 billion.
  2. As of 3/2/2016 https://projects.propublica.org/bailout/.
  3. Did Saving Wall Street Really Save Main Street? The Real Effects of TARP on Local Economic Conditions https://www.fdic.gov/bank/analytical/cfr/ROMAN%20DAY1_PM.pdf
  4. ‘TARP After Three Years: It Made Things Worse, Not Better’ http://www.forbes.com/sites/richardsalsman/2011/10/09/tarp-after-three-years-it-made-things-worse-not-better/2/#4613b1b85944