Treasury's TARP Chief: Two Teams ID'ing MBS to Purchase

The Treasury Department has set up two teams to identify troubled mortgage-back securities and whole loans to purchase as the agency readies its first asset management hires. "We are moving to implement the TARP as quickly as possible while working to ensure high quality execution," said Neel Kashkari in his first speech as director of Treasury's "Troubled Asset Relief Program." Treasury's whole loan team is working with bank regulators to identify what type of residential mortgages will be purchased first. "Regional banks are particularly clogged with whole residential mortgage loans," Mr. Kashkari told a meeting of the Institute of International Banking on Monday. The interim assistant Treasury secretary for financial stability noted that TARP will employ several tools to free up the flow of credit, including purchasing equity stakes in financial institutions and insuring MBS and whole mortgage loans. Treasury is soliciting public comment for "good ideas" on how to structure this program to insure troubled assets, he said. "We are requiring responses [to a Federal Register notice] within 14 days so we can consider them quickly, and begin designing the program," Mr. Kashkari said. Meanwhile, the TARP director has recruited several experienced government officials to manage TARP, including Jonathan Fiechter who will serve as interim chief risk officer and Donna Gambrell Hammond who was named interim chief of homeownership preservation. Both worked at the Resolution Trust Corp. Mr. Fiechter is a past director of the Office of Thrift Supervision. Treasury requires that managers who purchase assets to disclosure any conflicts of interest. "Treasury will only hire firms when we are confident in our and their ability to manage any conflicts," Mr. Kashkari said.