Green Room

Confirmation of What We Already Knew About TARP

posted at 9:34 am on December 10, 2009 by

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.

Cross-posted.

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I don’t know, I read the article and this guy got BURNED from working on TARP.

He’s “recovering” up in the middle of no where north of Reno.

I thought the scariest part was how totally clueless EVERYONE in DC is / was / will always be. Without this guy, it looked like they literally wouldn’t have known or done anything. I guess no one wanted to put their name on overseeing it or soomething.

Stephanie on December 10, 2009 at 9:47 AM

Love the name. Mr. Kashkari=took our cash and carried it off. This was one of the biggest con jobs of all time. What’s the old saying, ‘if you’re going to steal, might as well steal big’.

Kissmygrits on December 10, 2009 at 9:59 AM

Stephanie – agreed, he did get burned. Put on lotsa weight, attacked in the blogosphere, etc. Went to recover somewhere isolated. Plus I’m sure you’re right that many people were reluctant to be associated with TARP.

He’s reaping the rewards now, though. New job at Pimco, the world’s biggest bond fund, as a managing director and head of new investment initiatives, helping Paulson write his memoir, etc.

Kissmygrits – the climate change con, once in full swing, is going to dwarf this one, and every other up until now. It’s going to be spectacular.

Track-A-'Crat on December 10, 2009 at 10:08 AM

Geithner was just on the tube testifying before the ‘Oversight Committee’, and the very first question from the Chair, Elizabeth Warren, was a catalog of the things TARP was intended to do, none of which have been done.

Geithner immediately replied with a well prepared and well rehearsed answer because The Obama administration *knew* they were going to get that question. They *knew* because they know that TARP has never done what it was said would be done, they have no intention of ever doing what was used to sell the program.

The whole thing is a fraud, The Obama administration is nothing more than a confidence game.

Seven tricks of the con artist.

Skandia Recluse on December 10, 2009 at 11:11 AM

“Look mom, I traded the TARP funds for these magic beans!”

How long will it be, after these funds have been spent on other things, that TARP II will be urgently needed for this unprecedented and unexpected emergency in the ________ system?

GnuBreed on December 10, 2009 at 5:44 PM

Skandia – great link, thank you. Should be required reading for anyone dealing with politicians.

GnuBreed – exactly. To what does this precedent not apply?

What exists that the Democrats could not find an excuse to flood with taxpayer money? It’s a win-win for them – they get the redistributive effect immediately, and know that taxes will have to be raised in the future to offset all the borrowing, thus punishing the successful and rewarding the feckless again.

And they’re seemingly willing to pay the price of losing office to do this.

Track-A-'Crat on December 10, 2009 at 9:12 PM

That article was just terrifying. I feel sorry for Mr. Kashkari, and for his associate who had the heart attack. They were clearly set up to be cannon fodder and were too filled with ambition/naivety to recognize it.

But seriously, what the heck were they thinking? The statist arrogance of these people is just staggering. None of them had any clue about what they were doing, yet chose to subvert the existing system of banking and finance regulation in the name of “saving” the banking system. Even now, Mr. Kashkari does not seem to understand that the only things he was “saving” were the behinds of a small number of politicians and banking executives. The system is still crashing, but it is doing so behind the TARP veil, free from the prying eyes of the public and its representatives.

blueguitarbob on December 11, 2009 at 10:01 AM

blueguitarbob – exactly. The overriding impression (again) is that no-one at Treasury knew squat about the problem. Not that that prevented them from taking action to “solve” it, of course. Thank you, power-crazed bureaucrats and politicians who can only think in the short-term.

Track-A-'Crat on December 11, 2009 at 10:12 AM