Confirmation of What We Already Knew About TARP
posted at 9:34 am on December 10, 2009 by Track-A-'Crat
And that is that the brainiacs in charge of it had not the slightest clue about what they were doing.
The guy with the slightly unnerving stare above is Neel Kashkari, the 35-year-old banker picked by then Treasury Secretary Hank Paulson to design the TARP.
This article in the The Times (London) gives some behind-the-scenes details of the madness at the Treasury. Kashkari describes how:
one colleague screamed in panic over the imploding financial system, while another almost died of heart problems because he worked on the bailout rather than seeking medical treatment.
Rather than screaming or nearly having a self-induced heart-attack, Kashkari’s own way of dealing with the sh*tstorm was to stuff his face with junk food. Doritos, to be precise:
Mr Kashkari, who piled on 23 pounds as he comfort-ate family-sized bags of Doritos through the height of the credit crisis, described the panicked period between October 2008 and May 2009 as “like a dream”.
I’m sure that all the nutrients in family-sized bags of Doritos really fueled the deep thinking being done in the department. So profound was the analysis, in fact, that Kashkari,
admitted that he plucked “a number out of the air” when deciding with Mr Paulson how much funding to request from Congress for the Tarp.
I’m so glad that it was an “expert” that totally guessed how much funding should comprise TARP, rather than some completely random guy off the street. If he just “plucked a number out of the air”, then when didn’t he grab zero? What’s wrong with that figure?
It gets better. Guess what was used to calculate the bailout figures?
A new, prototype, semi-organic, super-computer?
Not quite. Kashkari used his, er, BlackBarry as a handy pocket calculator, enabling him to compute that,
We have $11 trillion residential mortgages, $3 trillion commercial mortgages. Total $14 trillion. Five per cent of that is $700 billion. A nice round number.
Quite how someone almost had a heart-attack working out calculations of that depth escapes me.
So, $700 billion was chosen because, essentially, it was “a nice round number.” As far as explanations go, that’s like claiming that Truman nuked Japan because he “had a hunch” about it. A really strong hunch, mind you.
Note to Neel: though it no doubt flatters your ego, you might not want to give more interviews to international publications that do nothing but make you look like a chump.
Just a thought.