By Arun Kumar, IANS,
Washington : An Indian American Neel Kashkari was appointed to oversee the $700 billion US financial rescue plan as stocks plunged more than 6 percent with the Dow Jones index diving to its lowest level in almost five years.
The US Treasury Secretary Henry Paulson Monday named key aide Kashkari, 35, a former executive at Goldman Sachs, to manage the Troubled Assets Relief Programme and the newly created Office of Financial Stability.
The move came as the Dow Jones industrial average fell 711.01 points, or 6.89 percent, to 9,614.37. It is the first time since November 2003 that the Dow has traded below 9,700.
Kashkari,currently the assistant Treasury secretary for International Economics and Development joined the Department in July 2006 and worked on several of its initiatives in response to the housing crisis – including the formation of the mortgage industry alliance Hope Now.
Kashkari, who as one of Paulson’s close advisers on the crisis helped draft the legislation for purchasing and managing up to $700 billion in troubled assets, will manage the centrepiece of the rescue plan.
The Department Monday also released its guidelines for how it would hire firms to manage asset purchases. Asset managers and other private-sector agents involved in running it may be hired “through other than full and open competition”, it said in a statement. The interim guidelines also address conflicts of interests for contractors who are hired for the programme.
The President’s Working Group on Financial Markets, which includes Paulson and Federal Reserve Chairman Ben Bernanke, said 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.
President Bush’s top economic advisers also vowed to work with their counterparts around the world to restore confidence and stability to financial markets roiled by tight credit and worries about a global economic slowdown.
In a fresh effort to loosen dangerous credit clogs, the Federal Reserve said it will significantly expand its loan programme to squeezed banks, increasing one programme to as much as $900 billion by the end of this year.
The Fed also said it will begin paying interest on commercial banks’ reserves, another way to expand the Fed’s resources to battle the worst credit crisis in decades.
The statement from the president’s working group laid out a number of initiatives that the Treasury, the Fed and other government regulators including the Federal Deposit Insurance Corp. would be undertaking.
“The diversity of institutions and markets under stress, and the magnitude and complexity of the adjustment under way, requires that the tools available to policymakers, regulators and supervisors be used in forceful and coordinated ways across regulatory and supervisory agencies in the United States and throughout the world,” it said in its statement.