The week Wall Street capitulated
"There’s a wildfire that the authorities are struggling to put out. We the market need a firebreak"
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| Monday, October 6: Who? The man in charge of the Tarp is announced: Neel Kashkari |
After collectively asking ‘Who?’, faith that the US Treasury is getting a grip on the financial crisis is not enhanced by the announcement that Neel Kashkari, an assistant secretary of international affairs in the department, will oversee the $700 billion rescue plan. Few are surprised that Kashkari is a former Goldman banker but they are bemused to find he was a relatively lowly VP before he left. The first meeting Euromoney had that fateful week was surprisingly upbeat. But that was because the banking official – an expert in financial institutions as it happened – believed that Paulson’s scheme to buy up illiquid assets was a big part of the solution.
"The Tarp will help the fixed-income markets. It will release capital and provide an additional avenue for the deleveraging of banks’ balance sheets. And it will help achieve the primary objective of boosting liquidity," he said.