(Associated Press WorldStream Via Acquire Media NewsEdge) WASHINGTON_As it happens, rescuing the economy will take a rocket scientist.

That is what the man picked Monday to engineer the largest financial bailout in U.S. history did before shifting to the world of finance.

Neel Kashkari, who worked closely with Treasury Secretary Henry Paulson at the investment firm Goldman Sachs, followed him to the Treasury in July 2006 and has served as one of his top advisers who handled a number of tough assignments.

Kashkari, an Indian-American who was born in Ohio, is one more example of how Paulson has drawn on former executives at Goldman to staff Treasury. Paulson also leans heavily on former Goldman Sachs executives Dan Jester, a financial institutions banker, and Steve Shafran, who focused on corporate restructuring while at Goldman.

Officials said Paulson particularly was impressed with Kashkari's critical help in the creation of the HOPE Now program, an October 2007 Treasury initiative to cajole private mortgage companies into stemming a tidal wave of foreclosures by getting faltering borrowers into more-affordable mortgages.

The program has been criticized for offering too little in terms of assistance, but the Bush administration points to it with pride as an example of a successful effort to harness private sector forces to deal with the steepest slump in housing in decades.

Kashkari, 35, has had a varied career since getting his bachelor's degree and master's degree in engineering from the University of Illinois at Urbana-Champaign, following in the footsteps of his father, a retired professor of engineering.

Kashkari worked in research and development for TRW Inc., now part of defense contractor Northrop Grumman Corp., developing technology for NASA space science missions such as the James Webb Space Telescope, replacement program for the Hubble telescope.

Kashkari decided to switch from rockets to finance, returning to college where he got a master's degree in business administration from the Wharton School, the business school of the University of Pennsylvania. He then joined Goldman Sachs Group Inc. in San Francisco, California, where he headed up Goldman's information technology security investment banking practice.

At Treasury, Kashkari has been given a string of vital tasks from helping to get Hope Now launched to helping draft the legislation that Congress passed last week to create the $700 billion rescue effort.

Scott Talbott, a lobbyist for the Financial Services Roundtable, a group of 100 large companies, said Kashkari will have his work cut out for him.

"He's got the health of the housing market and the economy on his shoulders," he said. "But he's got a $700 billion checkbook, too."

Kashkari will keep his current title as assistant Treasury secretary for international affairs but will head the newly created Office of Financial Stability on an interim basis.

Designation of Kashkari as the interim head of the new office was necessary because the permanent head of the office, which is a presidential appointee, must be confirmed by the Senate, currently in recess ahead of the November elections.

It is possible Kashkari may never get the job on a permanent basis since the Senate, now controlled by Democrats, probably will leave an interim head in place so that the next president, either Barack Obama or John McCain, can choose a permanent replacement. Paulson already has announced that regardless of who wins the election, he plans to step down as Treasury secretary on Jan. 20 when the next president is sworn into office.

Some analysts were not impressed with the selection of Kashkari.

Robert A. Eisenbeis, a former director of research at the Federal Reserve Bank of Atlanta, said that Paulson should have chosen someone more familiar with the government's response to the savings and loan crisis of the late 1980s and 1990s, when the Resolution Trust Corp., was created to dispose of billions of dollars of assets from bankrupt savings and loan companies.

"The kind of people that you need are the ones who were associated with RTC and had experience dealing with these large volumes of assets," Eisenbeis said. "Working at Goldman Sachs doesn't qualify you for doing this job."

The selection of Kashkari was one of a number of actions the administration took Monday in an effort to demonstrate quick movement to implement the bailout program.

It issued interim guidelines for the choice of the expected five to 10 asset management firms who will set up a process to buy up to $700 billion of distressed mortgages and mortgage-related assets from financial firms. The hope is that by removing the toxic assets from the firms' books it will encourage banks and other financial institutions to resume more normal lending operations.

Emphasizing speed, the Treasury Department posted on its Web site the specifications companies will have to meet to apply for the asset jobs and asked interested companies to submit applications by 5 p.m. EDT (2100 GMT) Wednesday. Even with this fast approach, it is not expected that the first asset sales will occur until after the Nov. 4 presidential election.

Treasury also announced that it was expanding its debt auctions in order to obtain the resources to make the coming asset purchases, announcing the sale of $100 billion in short-term debt just this week.

In addition, the President's Working Group on Financial Markets, which includes Paulson and Federal Reserve Chairman Ben Bernanke, said in a statement released Monday before markets opened that it would move "with substantial force on a number of fronts" to implement the expanded authorities granted to the government when Congress passed the emergency rescue package last Friday.

The Fed also made a number of moves Monday to bolster its resources to supply emergency loans to the financial system.

Investors initially were not reassured. Stocks tumbled with the Dow Jones industrial average falling at one point by as much as 800 points, a record, before recovering to close down by 370 points.

Copyright ? 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

[ Back To TMCnet.com's Homepage ]

Discussions: