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Neel Kashkari — news, coverage & facts — IJR

Treasury Department

In May 2006 President George W. Bush announced his intention to appoint Henry Paulson as Secretary of the Treasury. Kashkari contacted Paulson and asked to join him at Treasury. Despite not knowing Kashkari well, Paulson agreed to meet with him, and much later offered him a job as a policy generalist. Kashkari accepted, and then Paulson remembered to confirm that Kashkari was a Republican. After the U.S. Senate confirmed Paulson, he and Kashkari started at Treasury on the same day. Kashkari was one of several Goldman employees who followed Paulson to Treasury.

Kashkari began as a special assistant to Paulson working on energy policy. He and Allan B. Hubbard developed Bush's "Twenty in Ten" plan to promote energy conservation. He also worked on issues related to India, particularly infrastructure development. In November 2007, Bush nominated Kashkari to be Assistant Secretary of the Treasury for International Economics and Development. The U.S. Senate confirmed the nomination in June 2008, and Kashkari was sworn in the following month.

By the summer of 2007, concerns over the credit quality of private-label securitizations, underwriting standards and institutional solvency accelerated. The value of mortgage-backed securities backed by U.S. subprime mortgages declined sharply as it became clear that many of the borrowers would continue to default on the mortgages. This caused a housing glut and the subprime mortgage crisis as the banks holding the mortgages rushed to foreclose the loans. This ultimately intensified into the 2008 financial crisis with broad implications.

Kashkari played important roles in several episodes of the crisis. He led Treasury's participation in the Hope Now Alliance, a mortgage industry initiative coordinated by the federal government that aimed to reduce foreclosures by modifying loan terms on a loan-by-loan basis. In March 2008 he represented Treasury at negotiations that led ultimately to the federally sponsored takeover and rescue of the investment bank Bear Stearns by JPMorgan Chase. He was in charge of Treasury's (ultimately unsuccessful) efforts to create a market in the U.S. for covered bonds, whose value would continue to be guaranteed by the issuing bank after the bank had sold them. He also worked closely with Paulson on Treasury's takeover of the government-sponsored enterprises Fannie Mae and Freddie Mac on September 6, 2008, and the federal bailout of American International Group on September 16.

In early 2008, Paulson directed Kashkari and fellow Treasury aide Phillip Swagel to write a plan to recapitalize the banking system in case the crisis worsened. The plan called for Congress to authorize Treasury to spend $500 billion to buy mortgage-backed securities from troubled banks, replacing them on banks' balance sheets with safe, liquid Treasury bills. This would prevent runs on the banks and encourage them to lend. The plan was conceived as an alternative to proposals from the staff of the House Financial Services Committee, then led by Democratic Representative Barney Frank.

Following the collapse of the investment bank Lehman Brothers on September 15, 2008, the Emergency Economic Stabilization Act of 2008 (EESA) was enacted on October 3. Both Democrats and Republicans in Congress voted for the law. Kashkari was one of several Paulson aides who was heavily involved in the crafting the legislation. Based in large part on Kashkari and Swagel's recapitalization plan, the EESA created the Troubled Asset Relief Program (TARP), a $700 billion bailout fund for financial institutions threatened with collapse. Kashkari initially proposed a $1 trillion fund, but Paulson vetoed that number as too large. Kashkari came up with the lesser figure of $700 billion by taking 5% of the $14 trillion in then-outstanding mortgages in the United States.

To administer TARP, the EESA created within the Treasury Department a new Office of Financial Stability to be headed by an Assistant Secretary of the Treasury for Financial Stability, who would be nominated by the president and confirmed by the Senate. However, it also specified that the Treasury Secretary could designate an interim Assistant Secretary to run the office. Kashkari first came to widespread public attention on October 6, 2008, when Paulson named him to this position. During his time running TARP he retained his title as Assistant Secretary for International Economics and Development, but his international affairs responsibilities were delegated to another Treasury official.

Noticing a lack of necessary expertise in investment within Treasury, Kashkari recruited new staff for the program, some from government and others from industry, ultimately hiring about 100 people by January 2009. Kashkari also chaired the five-member investment committee within Treasury that decided which banks would receive TARP money.

With Bush scheduled to leave office on January 20, 2009, following the November 2008 election, Kashkari's appointment was initially viewed as temporary. There were even plans to replace him before Bush left office. However, after Obama won the election, his transition team asked Kashkari to remain at Treasury after the inauguration for a limited period. He left the Treasury Department on May 1, 2009, replaced at the helm of TARP by Herbert M. Allison.

During his time heading TARP, Kashkari was frequently called to testify before Congressional oversight panels. The House members would often question him hostilely over the politically unpopular program, but at least one, Representative Dennis Kucinich, assured Kashkari privately that he thought Kashkari was doing a great job. Another public critic, Representative Gregory Meeks, later thanked Kashkari for his service. Kashkari also won praise from Paulson and Timothy Geithner, Paulson's successor as Treasury Secretary and Kashkari's boss under the Obama administration. Neil Barofsky, who oversaw TARP within Treasury as a special inspector general, commended Kashkari's commitment to the job but criticized his actions. Elizabeth Warren, who headed TARP's Congressional Oversight Panel, later criticized Kashkari for allegedly promising to focus on smaller banks shortly before Treasury announced additional measures to bail out Citigroup. Kashkari later said that Bush not running for reelection allowed the government to "do things that were deeply unpopular but we knew were the right thing."

2014 California gubernatorial campaign

Kashkari has said he first considered running for Governor of California after Republican nominee Mitt Romney lost the 2012 presidential election to Obama. He spent the year after his resignation from Pimco preparing to campaign in the 2014 gubernatorial election, touring the state, hiring a staff, and meeting with potential donors. He announced his candidacy on January 21, 2014, citing jobs and education as his top priorities. It was his first run for elected office. He finished second to incumbent governor Jerry Brown in the nonpartisan blanket primary and lost to Brown in the November general election. After the campaign, Kashkari published "Lessons from the Trail", a firsthand account of what he learned from his gubernatorial campaign to help future candidates.

Brown was widely expected to finish first in the primary, so Kashkari's principal opponent at this stage was his main rival for second place, Republican state assemblyman Tim Donnelly. Kashkari was seen as a fiscal conservative and social moderate, while Donnelly identified with the right-wing Tea Party movement.

Kashkari enjoyed a significant funding advantage over Donnelly. He raised $1 million within two weeks of announcing his candidacy and went on to raise a total of US$4.1 million, including $2 million of his own money. Republican donors Charles Munger Jr. and Robert Addison Day also spent $400,000 supporting Kashkari through an independent expenditure committee. Donnelly raised only $447,000 (~$581,721 in 2024) in 2014.

For most of the race, Kashkari trailed Donnelly in public opinion polls. Kashkari's moderate views on social issues, involvement with TARP, and vote for Obama in 2008 were unpopular with many Republican voters, who were more enthusiastic about Donnelly. Other Republicans feared that if Donnelly advanced to the general election he would not only lose to Brown but also hurt other Republicans running for office because of his narrow appeal to white conservatives, staunch right-wing views, inflammatory rhetoric, and criminal record. The perceived threat from Donnelly attracted endorsements for Kashkari from national Republicans including Romney, Jeb Bush, Condoleezza Rice, and Karl Rove, as well as California Republicans including Pete Wilson and Darrell Issa. These advantages allowed Kashkari not to campaign farther right than he wanted to.

Kashkari's fundraising advantage allowed him pay for more advertising in the last weeks of the race. The first poll showing him ahead of Donnelly came out days before the election. In the June 3 primary, Kashkari came in second with 19% of the vote, and Donnelly came in third with 15%. Brown beat them both, with 55%.

Brown, a Democrat, was long considered the favorite to win the general election. His approval ratings were high, and as of the end of the primary his campaign had US$21 million. Kashkari, by contrast, spent almost all his campaign money to beat Donnelly, and additional financial support from the national or state Republican Parties was unlikely. Kashkari cited George W. Bush's upset victory over Ann Richards in the 1994 election for Governor of Texas as a model for an upset against a popular Democratic governor.

Kashkari lost the November 4, 2014 general election to Governor Jerry Brown by approximately 1.4 million votes, with Brown winning 60% of the vote. Brown won the largest gubernatorial victory since 1986 despite running a low-key campaign.

Political positions

Kashkari has been a Republican his whole life. In a 2008 speech to the American Enterprise Institute, Kashkari described himself as "a free-market Republican". In 2013, he described himself as a "pro-growth Republican". He opposes most of Obama's economic agenda and supports cutting business regulations. He has called for cutting Social Security and Medicare and replacing the Patient Protection and Affordable Care Act. In 2012, he voted against California's Proposition 30, which raised taxes in the state, and for Proposition 32, which would have weakened labor unions' political influence. In a March 2014 interview, he praised Wisconsin governor Scott Walker's controversial policies limiting collective bargaining.

On social issues, he has described himself as libertarian and "a different kind of Republican", supporting abortion rights, same-sex marriage, and a path to legal status for illegal immigrants. He voted against California's Proposition 8, which banned same-sex marriage in 2008. In 2013, he was one of 131 Republicans who signed a pro-marriage equality amicus curiae brief submitted to the U.S. Supreme Court as part of Hollingsworth v. Perry, the case in which the final appeal against the previously-found unconstitutionality of Proposition 8 was rejected for lack of standing. Kashkari owns four guns and considers waiting periods and background checks before purchasing a firearm to be reasonable.

On environmental issues, he voted against California's Proposition 23, which would have suspended the state law that limits greenhouse gas emissions. He believes climate change is real and man-made. He has spoken positively of fracking and offshore oil drilling and negatively of California's cap-and-trade program.

Kashkari cites Paulson, Mitch Daniels, and Jeb Bush as political mentors. He voted for Obama in the 2008 presidential election and Romney in the 2012 election.

In March 2014, Kashkari proposed waiving state income taxes for 10 years for businesses that move to California with at least 100 jobs; waiving state income taxes for California companies that build new manufacturing plants in the state; expanding hydraulic fracturing (fracking) of oil deposits; reducing environmental regulation; and increasing water storage in response to the state's ongoing drought. Economists and political experts interviewed by the Los Angeles Times were skeptical of the plan's chances in the Democratic-dominated California Legislature and of its potential effectiveness were it to be passed.

In January 2020, Kashkari and Alan Page proposed amending a portion of the Minnesota State Constitution to read, "All children have a fundamental right to a quality public education that fully prepares them."

At a January 2021 Minneapolis Federal Reserve event on racism and the economy, Kashkari commented on the contrast between how the rioters at the U.S. Capitol were treated compared to black Americans, saying, "If those were Black militants, armed militants, storming the U.S. Capitol, I think they'd all be dead right now [ . . .] That is the most stark example of racism and disparities in our society."