In today's New York Times, reporter David Leonard writes about former assistant Treasury secretary Neel T. Kashkari, who directed the government's Troubled Asset Relief Program for banks, and his recent decision to join PIMCO, headed by Bill Gross. Much of the article describes Kashkari's relationship and dealings with Gross in 2008 and 2009 regarding the financial crisis.

According to Leonard, "several former Treasury officials said Gross had frequently been in touch with Mr. Kashkari and others in government about various initiatives. None of those officials or others suggesting there was anything improper about those contacts."

"Gross was one of those guys, along with Warren Buffett, who were really interested in trying to give us ideas and be helpful in resolving the crisis," said Robert F. Hoyt, a former Treasury Department general counsel under Treasury Secretary Paulson. "They would send memos to Treasury. They weren't ideas we ended up implementing, but they were interesting."

On October 6, 2008, Buffett wrote a very detailed, four-page letter to Paulson, proposing "a program that allows Treasury to buy more than the 700 billion of assets anticipated and allows it to do so in a way that dramatically reduces the risk-to amost zero-that Treasury will lose money on its purchases. Indeed, the program I recommend is likely to produce profits."

In his letter, Buffett personally commited $100 million ("constituting 20% of my net worth outside of my Berkshire holdings, which as you know are promised to charity") to the program.

I wonder if Paulson shared this letter with members of Congress.

While Kashkari supported an asset purchase plan, Paulson did not, deciding to invest the government funds directly in the banks, "considering it more important to stave off dissaster," according to Leonard.
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Devin Leonard, After a Year of Tumult at Treasury, Former Bailout Chief Took a Quiet Path to Pimco, New York Times, January 1, 2010