WASHINGTON, DC: It’s not yet known for sure which position he’s eyeing in California, but Neel Kashkari, 39, who impressed one and all with his cool demeanor as the head of the U.S. Treasury’s much-maligned Troubled Asset Relief Program (TARP) during the financial crisis, has left his job at the largest bonds company in the world, set up a campaign style website, and in interviews has made it clear that he’s in the reckoning for public office.
Kashkari said he is leaving Pacific Investment Management Co. to consider running for public office in Democrat-heavy California as a Republican, in an interview to The Wall Street Journal.
“As I look at California, there are huge problems,” Kashkari said, pointing to the state’s long-term budget troubles, weak job market and problem-plagued public schools. “These challenges are huge but they’re of our own making – so they are within our capacity to solve,” he said.
Kashkari was hired by Pimco in 2009 to help turn the big bond-fund company into a player in equity funds. Since then, the unit of Allianz SE ALV.XE -1.14% has launched six new stock mutual funds.
Pimco, based in Newport Beach, California, manages the world’s largest bond fund, Pimco Total Return, which has assets of $285 billion.
Building an equity portfolio has been slow going. The six funds had about $3.6 billion from U.S. investors, according to research firm Morningstar, and $10 billion in all, according to Pimco, including money from institutions and foreigners that Morningstar doesn’t tally. That is less than 1% of the $1.9 trillion that Pimco manages, said the Journal.
The performance of funds that Kashkari launched has been spotty. All six funds lagged behind benchmarks assigned by Morningstar in 2012, using the institutional class of shares as the metric. Kashkari said that the funds were designed to limit downside risk and, as a result, tend to trail when the market is rising.
Kashkari, 39 years old, didn’t specify which political office he is eyeing. But with no contests for U.S. Senate seats from California until Democratic Sen. Barbara Boxer’s term expires in 2016, the next high-profile statewide race will be the governor’s post. Gov. Jerry Brown, 74, a Democrat, hasn’t said whether he plans to run again in 2014.
A Republican would face an uphill battle for a statewide seat in California, where every statewide office is held by a Democrat and GOP registration has been shrinking as the state’s population becomes younger and more ethnically diverse, said the Journal report. In 2010, Meg Whitman, former chief executive of eBay Inc. and now chief executive of Hewlett-Packard Co., HPQ +0.50% ran for governor as a Republican against Mr. Brown. She spent more of her own money than any candidate in U.S. history and ended with only 41% of vote.
“I’m not the typical California Republican. I’m the son of immigrants,” Kashkari said. “I come from modest upbringing. I have a successful track record. I’m an optimist. And I think something can be done if people work together.” He said he plans to seek advice from California Republicans and Democrats before making any decisions, but already has launched a campaign-style website.
With his shaved head and cool demeanor under cross-examination at televised hearings, Kashkari became the public face of TARP, the $700 billion bank bailout launched during the George W. Bush presidency and continued in the post during the first several months of the Obama administration.
The Treasury said last week that it has recovered $387 billion, or nearly 93%, of the funds actually disbursed for TARP.
“Obviously TARP is very unpopular,” Kashkari said in the interview. “But it’s the best example we have in modern history of Democrats and Republicans coming together to do something controversial but absolutely necessary and absolutely successful.…Both Sacramento and Washington, D.C., have a lot of politicians who want to do the easy things which’ll make them popular. We’re out of easy things to do.”
The New York Times reported that on his website, Kashkari emphasized his core concerns, including the state economy and education. He writes on his site:
“California has so many strengths – a vibrant, diverse, hardworking population, world-class universities, unparalleled natural resources and beauty – it is up to us to unlock its potential and fulfill the dreams of all of our people. Our government must work for all Californians.
I am reaching out to leaders in communities across California to hear their ideas, share my own, and explore how I can best affect positive change in our state. After decades of benign neglect, I believe it is our duty to finally have an honest discussion about these issues and take bold action to help all Californians succeed.”
A former Goldman Sachs employee, Kashkari was only 35 at the time when he took over as head of TARP. It earned him the nickname the $700 Billion Man, after the size of the extensive bailout.
At Goldman, where he worked as an investment banker in Silicon Valley, he was known for his bald head and steady demeanor. It was at that firm that Kashkari became acquainted with Henry M. Paulson Jr., then Goldman’s chief executive, said the Times.
When Paulson became Treasury secretary in 2006, Kashkari reached out to ask about joining the government. He became a lieutenant to Paulson, and co-wrote a doomsday bank rescue proposal, entitled “Break the Glass,” that formed the basis of what became TARP.
Kashkari was born in Akron, Ohio, to Chaman and Sheila Kashkari – who are Kashmiri Pandits – and grew up in the Akron suburb of Stow, Ohio. He attended Stow–Munroe Falls schools before transferring to the Western Reserve Academy in Hudson, Ohio, from which he graduated in 1991.
He earned bachelor’s (1995) and master’s (1997) degrees from the University of Illinois at Urbana-Champaign. Both degrees were in aeronautical engineering. As a graduate student, he was the team leader for the mechanical engineering component of a solar-powered car the school entered in the 1997 Sunrayce, a solar-powered vehicle race from Indiana to Colorado. He earned an MBA from the Wharton School at the University of Pennsylvania in 2002.
Known to keep a low profile and lead a simple life, Kashkari and his former wife Minal – they got divorced last year – had residences in Silver Spring, Maryland, as well as near San Francisco. (GIN – The American Bazaar Online)