Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street by Neil Barofsky

Author:Neil Barofsky
Language: eng
Format: mobi, epub
ISBN: 9781451684933
Publisher: Free Press
Published: 2012-07-24T07:00:00+00:00

WE HAD SOME moderate hope that our relations with Treasury might improve after Kashkari stepped down in late April. He was gracious in his departure, stopping by our Gallatin conference room to pick up extra copies of the bound reports and complimenting us on how comprehensive they were. Though I’d had my run-ins with Kashkari, I found myself surprisingly conflicted about his departure. Sure, he was combative, not always forthcoming, and excessively deferential to Wall Street, but Kashkari had generally been straightforward with me. I don’t think he ever flat-out lied to me, which in Washington put him into rarefied air. I have no idea if he felt similarly, but I had a grudging respect for him. I thought of our disagreements as just that: differences of opinion passionately held by two people with very different worldviews. But I never questioned his deeply patriotic commitment to his job. He had made great personal sacrifices, and as he left Treasury, I congratulated him on his service and for his significant role in helping to prevent a complete collapse of our financial system.

I even felt empathy for him after a front-page Washington Post piece appeared about eight months later. The article—accompanied by a photograph of a wild-eyed Kashkari chopping wood while building a cabin near Lake Tahoe—painted him as a scarred victim of post-traumatic stress disorder from his days in Washington.21 Kashkari, of course, landed on his feet and soon announced that he was taking a high-level position at PIMCO. (The revolving door between Treasury and the giant investment funds and banks just never stops spinning.)

In any event, we thought his replacement, Herb Allison, might be a considerable improvement.

Allison was in many ways Kashkari’s opposite. Unlike us thirty-somethings who had been running TARP and SIGTARP, Allison, at sixty-five, was at the end of his career. He was a lifetime product of Wall Street, having spent twenty-eight years at Merrill Lynch, where he served as its treasurer, chief financial officer, chief operating officer, and president. He left Merrill in 2002 to become CEO of the giant pension manager TIAACREF, and retired in 2008 as a very wealthy man. Allison’s retirement was cut short in September of that year, however, when Paulson offered him the job of CEO and president of Fannie Mae as Treasury put it into conservatorship. Allison accepted and served in that job until President Obama nominated him to run TARP.

Though Allison certainly wasn’t going to provide any diversity from the Wall Street echo chamber at Treasury, he was at least an adult. We were also hopeful that his many years on Wall Street might provide him with a degree of skepticism about his former colleagues’ motives that was sorely missing at Treasury. It was also clear that he wasn’t going to be using his TARP service as a springboard to a job on Wall Street; he had already retired from that life.

Allison opened our first meeting by telling me how my name was regularly trashed at Treasury but emphasizing that he was ready to rise above all that and start with a clean slate.

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