Neel Kashkari: Why is this *tool* asking to be my Governor Again?

[Fergasun]

I have to get something off my chest.  I have a long memory.  In 2008, when the market's crashed, and our government had to bail the banks, AIG, and everyone else out, I loathed the program (Troubled Asset Relief Program) which was passed under the Emergency Economic Stablilization Act (EESA).  The more I looked into the program, the more information I gathered, the more it became clear to me that the program the Executive Branch asked for (that is Henry Paulson via George Bush, and *administered by Neel Kashkari*) and the program provided for by Congress; was completely different! 

 

I spent a long time from 2008 to 2012 gathering audio evidence, the complete Congressional record, other Congressional testimony and items such as White House press events, and a private call between Treasury Department officials (primarily Neel Kashkari) explaining to the banks what the bailout was supposed to be.  The bailout was basically supposed to be "the Federal government coming in and removing troubled assets from the bank balance sheets"; Mr. Kashkari directly spoke to banks in a call before passage through Congress, and explained that "we don't want to take ownership of the banks". 

 

Yet, when Mr. Kashkari administered the program, which he is now claiming as a success and a great benefit to the country; they took direct ownership of the banks, changed the program, and essentially did everything that Congress said they weren't going to do.  It is burned into my heart and brain as one of the most disgusting ruses ever committed against the American people via Congress! Hence, my 3 year quest, research, including documenting everyone's involvement and my desire to never be governed by such a fraud again. 

 

Neel Kashkari is part of the problem with politics and politicians.  He completely lied to the American people, he completely lied to the banks, and he was part of the program with the TARP.  I cannot stand that this man now wants to have a political career on the back of a program which was a complete fraud.  It pains me that there is another one of these guys who has some position in the Federal Reserve as well (I sent in letters to Senators, etc. but they really don't seem to care, even the Tea Party people). 

 

We need people who are less willing to say "wow, I'm going to do something completely wrong because my pal Hank Paulson asked me to...".  Forgot to mention this guy flipped his job into another job working at PIMCO.... and even seemed completely burned out after the TARP experience (I supposed that's to be expected). 

 

So to you Mr. Kashkari I will gladly vote for Governor Brown, simply because you are a fraud, liar, and are trying to switch the record.  Unfortunately I don't even think Governor Brown is smart enough to use TARP, and the physical record against him... or else there'd be commercials with Kashkari saying something like, "we don't want to take ownership of the banks" or the written record which talk about the "break the glass" proposal. 

 

So just because this guy has been enriched by his work under Henry Paulson in Goldman Sachs, his lust and desire to get into politics, and his experience running one of the biggest sham program's in America, he's qualified for governor?  Just because he's able to bank-roll most of his campaign and repeat the lame attack on Governor Brown's mass transit system, he's qualified for governor?  Just because this guy has held no position of power, not even mayor of Newport Beach or Redondo or whever he lives, or even city council membor, he's qualified for governor? 

 

Please... please... please get out of my face and just go away.... forever! 

[Elessar78]

Interesting. Do you have media connections that can publish this? Or are you going to do it yourself? 

[NoCalMike]

It's quite all right, he has no chance to beat Brown.

[88Comrade2000]

California is solid blue, you have no worries.

[twa]

California is solid blue, you have no worries.

 

other than bankruptcy.  

[mcsluggo]

out of all the things in th history of government,,,, i will never for the life of me understand the fixation on TARP and the level of heartfelt hatred....  seriously.  

 

 

 

It is burned into my heart and brain as one of the most disgusting ruses ever committed against the American people via Congress! 

 

 

Kashkari/Paulsen/Geithner et al... were saying that the banks weren't going to be turned into SOEs  (state owned enterprises), and become publicly administered, like you see in the biggest banks in China/Venezuela/Argentina/Khazakstan/Russia.. where-ever.... 

 

We avoided that trap, but the Government took equity slugs in payment for the huge asset transfers that were taking place, and then gradually, and orderly, sold off the equity positions --- so we ended up with private sector banks in the end.   

 

what is the problem?

[Larry]

Just a theory, but I suspect a part of it is the notion that a bunch of millionaires spent years intentionally and knowingly committing systematic fraud, and made trillions of dollars from it, and nearly destroyed the economy if the entire world, and cost millions their savings, and received no punishment whatsoever for it.

[Predicto]

Just a theory, but I suspect a part of it is the notion that a bunch of millionaires spent years intentionally and knowingly committing systematic fraud, and made trillions of dollars from it, and nearly destroyed the economy if the entire world, and cost millions their savings, and received no punishment whatsoever for it.

 

 

Sure, but TARP wasn't about punishment.   It was about not shooting off our economy's own feet.  Lots of bankers did awful things, but if all those banks failed, it would have been Great Depression X 3.  

It's quite all right, he has no chance to beat Brown.

 

 

Probably because Brown has done a pretty decent job, overall.

 

He is that rare bird: a liberal who is fiscally conservative.

[EvilMonkeyBoy]

Because he has money and likes power?

[Larry]

Sure, but TARP wasn't about punishment.   It was about not shooting off our economy's own feet.  Lots of bankers did awful things, but if all those banks failed, it would have been Great Depression X 3.

I'm well aware of the reasoning. Even understand it. Just attempting to propose a theory to explain the public feelings.

(Although, I suspect that, for a lot of people, their hostility towards HARP is more about then thinking that it was done by The Enemy Political Party.)

[Fergasun]

I will explain clearly why I hate TARP. All of a sudden the Treasury Dept comes out and says: "Give me $700B with no strings attached." They offer a plan where they are buying the "bad debt" AKA "troubled assets" off of the banks. Congress says... "thats great, but we should take equity/stock in the banks to protect ourselves". This happens in a week and the plan is to buy bad debt from the banks. There was much public debate oved the program. The main point was never simply to buy the banks.

Then, after the program gets voted on, Paulson says "on second thought, I am not going to buy bad debt, I am going to just invest in all the banks."

I will never believe that change was legal, in fact pondered launching my own case against Treasury Dept. The wording of the law actually provided a loophole where "taxpayer standing" exists. I spent 2 plus years familiarizing myself with the law and doing as much research as I could.

This glosses over the automaker programs as well, which were clearly unconstitutional.

If post facto, Congress ratified the action, I would be more than ok with it. But TARP is the epitomy of how our elected and appointed "ruling class" demonstrate to the core they care not about the law, democracy, or even pretend to care about it.

If Congress and citizens can't get upset about a complete misappropriation of that authority, the political system is a joke. I wanted to win the case so badly to embarrass everyone involved and both parties. In the end there was too much for me to risk by going up against powerful political forces, and even the courts are no guarantee so I let the time pass and let it go.

Democracy shemocracy and what not...

[mcsluggo]

So, to sum up (I think?)

 

your concern with TARP isn't the "rescue the bankers" angle that Larry alluded to, it is is the fact that rather than the federal government buying "troubled assets" from banks at a value greater than the current market values in order to free up (and inject) capital into the system (which also would reward/protect existing bank stockholders and lead to moral hazard for the inevitable next crisis)...

 

the problem is that instead the government purchased the trouble assets (partially) by taking an equity slug that better reflected the cost/value of the assets, was better reflected in bank share values (pushed down the value of existing equity to reflect the poor positioning of the banks portfolios, and reducing moral hazard) and enabled the governemtn to benefit from the shareprice rebound that was caused by the asset purchases (greatly reducing the overall cost of the TARP program to the taxpayer)

 

does that sum it up?

[Fergasun]

It's not the fact that there was a government rescue.  It was that from the beginning Plan A was completely discussed in Congress.  At first Paulson, etc. said "we need $700B to buy troubled assets, blank check, no strings attached."  Congress completely rejected his blank check, and crafted legislation that was aimed at regulating purchases of "troubled assets".  There were even people in Congress who asked/suggested "let's just put equity in the banks" but Paulson/Bernanke rejected those proposals.  Why?  Because they knew if Congress was going to buy up banks, Congress would put more strings and regulations... "hey, we really are bailing you guys out, let's make sure we have these extra strings added on". 

 

So Congress crafted a bill around Plan A, buying troubled assets!  Than a week later Paulson says:"We are going to use the authority to buy banks!".  My understanding is that Plan B was formed before the bill was passed in Congress, but they didn't want to ask Congress directly, specifically and clearly (because they wanted the bill passed).  Paulson and his little friends in Treasury (including Robert F. Hoyt, General Counsel, who conveninently parlayed his job at Treasury into a job at PNC Bank and another big bank since that time). 

 

Again, I spent so much time doing research I actually am tempted to put it all together in a Youtube video explaining why none of the people involved in TARP should ever work in government again. But, to be honest, it's not unexpected, and its not completely on the Executive Branch.  Congress *should have* gone on record and approved the actions, or disapproved it.  But, they would rather be able to harp and complain about TARP for political reasons for another couple of years.  Additionally, I they went back in January 2009 and put some regulations on banks that were getting TARPᅟ money (although I think they could have gone further had they done this *before* giving the banks money). 

 

So in short, Paulson & Co. sold everyone on Plan A, Congress crafted and debated and regluated Plan A... and then he switched into Plan Bᅟ such an un-democratic screw-up... but then again par for the course with our national political leaders who only care about getting elected and not actually doing any of the hard governoring work.  So it's also on Pelosi, Boehner and the leadership teams in both parties plus Chris Dodd, Barney Frank, and the Republican equivalents (Richard Shelby, forgot who the House minority member was).

[Predicto]

Things were moving pretty fast back then, as I recall, and they were winging it a little bit.  I don't see things to be nearly as sinister as you do.   I think you are assuming a lot of precalculations and motivations that weren't actually there.

oh, and I'm not voting for Kashkari, but only because Jerry Brown has really done a great job, all things considered.   Kashkari definitely is trying to take the California GOP in a more rational direction overall, and I applaud him for that.   If he was running against someone terrible like Grey Davis, I would vote for him.  

 

The California GOP has been dominated by social conservative evangelicals from Orange County for the past decade, and it has really hurt them statewide.

[Fergasun]

Things were moving pretty fast back then, as I recall, and they were winging it a little bit.  I don't see things to be nearly as sinister as you do.   I think you are assuming a lot of precalculations and motivations that weren't actually there.

No, it was pretty dishonest.  Treasury knew that buying equity in banks was on the table, in fact *Kashkari Himself* was on a call with the banks saying, "We have no intention of taking the equity in the banks."  Because Congress did allow them to buy equity in the banks as long as they were participating in the "Troubled Asset Relief Program". 

 

Wait, here's the reference, the audio of the call is still on YouTube.  This is Kashkari and I believe Robert F. Hoyt talking with the banks on a bank-industry call.

 

 

My point is, if you go to the American people and say "Give me $700B for Program A" you darn well better use it for program A... especially since that's a lot of freakin' money!  After 1 week+ worth of debate you can't decide, "Well, Program B might be better... but we will completely hide from Congress and the American people that we are going with Program B... because I've spent the past week talking about how Program A is the best plan, and I've poo-poo'd Program B because if we went with Program B Congress will put a bunch of string on it." 

 

It was that sinister.  If they had kept Congress in session for another week and said, "Buying troubled assets is not going to work because our banks are in a lot bigger problem than we want to admit" that would have been fantastic and completely democratic.  As it turned out, it was the quickest $700B program ever established and none of it spent as it was sold to Congress.  How is that not sinister? 

 

They weren't even winging it... Kashkari and another guy were asked to put plans on paper... you're going to make me look up my references. 

 

(ScribDB) "Break the Glass Plan by Neel Kashkari, April 15, 2008"

http://www.scribd.com/doc/23788612/Break-the-Glass-Plan-for-the-US-Treasury-Dept-by-Neel-Kashkari#open_download

 

The link still works!

 

Check out "Alternative D: Treasury to Fund New Equity in Banks".  This is the paper that Treasury used to pass around withᅟ Congress when the plans were being debated.  So actually we are on the 6th year anniversary of when this all went down.  It did happen in about a weeks span, but don't tell me that there was no time and they were "winging it".  All of the alternatives were known in April 2008... now I don't know how much Congress saw of "Break the Glass" before September, but they at all times were talking about the main plan... not "Alternative D". 

 

Had Congress known it was implementing "Alternative D" it would have implemented a little bit more and been a bit more punitive on the banks.  I'm not just a self-proclaimed expert in this, I'm the man on TARP.... I recorded all of the press conferences from White House and Treasury off of C-SPAN and still have them accessible, as well as all of the Congressional hearings and speeches.  If there was never TARP there would not be a Fergasun who paid attention to the BS politics and political games the parties play to get power.