Neil the 700b man

Not everyone remembers what they learned in school. But the nation must hope that Neel Kashkari will.

The 35-year-old Kashkari, interim head of the Office of Financial Stability, is largely unknown to the world outside Goldman Sachs, Silicon Valley or the Treasury Department.

People are looking for clues on the experiences that helped form the thinking of the one-time rocket scientist, Republican contributor and Goldman Sachs banker. Since 2006, Kashkari has been one of Paulson’s regular advisers, sharing with his mentor a hairstyle, Midwestern roots, a Goldman alumni card and even the same taste in popular soft drinks. Kashkari has only 45 days to hire a team before the November elections and devise a “lightning-speed” solution to problems including systemic risk and liquidity, stabilizing the markets and all the auctions, funds, cash infusions and swaps that come into play. Has he ever been in that position before? Probably not during his brief career as a banker.

So Deal Journal called Michael Useem, a professor at the University of Pennsylvania’s Wharton School of Business who taught Kashkari in 2002 as Kashkari was earning his M.B.A. Useem didn’t want to talk about Kashkari himself–he considers student-teacher relationships privileged, and doesn’t discuss student performance–but he gave us some perspective on a leadership training program that Kashkari participated in at Wharton that holds lessons for his time at Treasury.

In the winter of 2002, Useem took his students to the U.S. Army base at Fort Dix, N.J., for a computer-simulation exercise the Army uses to train its officers for battlefield experience. The eight-hour simulation forced the Wharton students to come up with plans to save 300 Bosnian refugees. The Wharton group broke up into 14 teams, including those representing the Red Cross, the Army and operational intelligence. The mission was how to make decisions in chaotic situations. “This is a microcosm of what Neel is doing as he walks into the office each day,” Useem said. “It’s a microcosm where the interests of different, competing groups have to be taken into account. He has to consider the banks, the home mortgage holders, and then, like in his experience in the Bosnia experiment, keep a clear head and preserve an ability to reach good decisions in a timely fashion. In the circumstances that Treasury faces now, they’re going to have to make enormous decisions at a rapid pace. It takes a stomach of iron to do that.”

It also takes a cooperative cast of characters. Useem pointed out that the Wharton students working with Kashkari didn’t achieve their mission, partly because the faculty planted three or four Army officers among them. “Just when things were going swimmingly well, these Army officers would send into the simulation a couple of dozen armed opponents of the Bosnian refugees, who would send sniper fire into the convoys carrying refugees,” Useem said. (Sounds a little like Congress to us.)

Useem, known for his love of Outward Bound-type expeditions to toughen up his students, no longer offers the Fort Dix simulation. Instead, he takes students to Patagonia, where they spend five days shivering and trying to learn leadership lessons. “People get worn down in a leadership position after a while,” he told us. “And that’s the point.”

Useem noted that Kashkari probably has learned much of what he knows already from Paulson, but he hopes the Wharton experience helped as well. “He’s prepared to take on the big job of the moment. In our philosophical view here, the need for speed and reaching tough judgment calls will help people do exactly what they have to do in the tough circumstance he’s walking into,” Useem said.

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