Questioner: The idea of leverage has been demonized in the middle of the credit crisis. And obviously, leverage has its pros and cons. So, I wanted to hear how you think about what's appropriate and wise. And then the second question is, what kind of opportunities for MBAs do you see in federal government going forward?
Kashkari: So, leverage has been demonized. I think that few people would argue that some of our largest banks didn't have too much leverage. Non-banks, in particular, had too much leverage. I also think there's too much leverage across our financial system. Individual Americans didn't save enough and had too much leverage. I think that the illness, or the symptom of too much leverage manifested itself throughout our financial system. It's hard to argue that there was not too much leverage. We're going through a de-leveraging process right now. And where we settle this new equilibrium is going to be very important in terms of what our economy looks like in the future.
We don't know where it's going to settle right now. Savings rates have gone way up, from -- way up. It's still only 4% or 5%, but it's way up relative to where it was just a year or two ago. So, I think that -- leverage -- you're right, has a role to play. It's not, "We should all have no leverage." But it needs to be prudent, and it needs to be rational. Did I answer your question on leverage?
Questioner: Yeah. If you have any more specifics...
Kashkari: I don't, because it's so situation-specific, in terms of individuals, in terms of banks, in terms of non-banks, et cetera. It's hard for me to generalize.
In terms of MBAs in government -- you know, I didn't know what to expect when I got to Treasury. I came from the private sector, both as an engineer and as a banker. And I think I had an expectation that people don't work hard in government, which couldn't be further from the truth. People are working very, very hard, day in, day out. Not just because of the credit crisis. But now in particular, the last couple of years.
You know, we at Treasury, in the Office of Financial Stability -- Treasury's a policy department. So, it writes papers, and it writes policy proposals year-in, year-out. It's not an investing department. So we had to build this from scratch. So, the TARP legislation created something called the Office of Financial Stability, which I ran. And I was the first employee of the office. In the last six months, we hired around 135 or 140 people, full-time people, dedicated to financial stability. We hired people from within the government, out of schools, from the private sector, from banks, from consulting companies, from law firms. All people coming in, trying to help out, do whatever they could to try to make our programs successful. So, I would encourage folks who are interested in government to look. It doesn't have to be at the federal level, it could be at the state or local level. I think there are great opportunities to take on large responsibility early in your career, to really be a part of something important. And I think you can develop good skills that I do think are transferable back to the private sector. I certainly hope they are. But I would encourage it. And I think that -- figure out what you're interested in, and -- you know, go to their Web sites. Meet people who are in government, et cetera, and try.
Questioner: Some 30% of the TARP funds that have been deployed so far have been invested in Citi and Bank of America, if I'm correct. About $90 billion. Can we reasonably expect that to be repaid? And do you have a time frame roughly how long that will take? And can TARP be profitable for the taxpayers if that doesn't happen, because it's such a huge portion of TARP?
Kashkari: I don't think it's appropriate for me to speculate about individual institutions. I will say that when we have had to intervene to stabilize individual institutions, the money that we've invested, those have been higher-risk investments than when we've made the more general investments in these hundreds of banks. So, AIG's in that category. General Motors is in that category. Chrysler's in that category, as well as Bank of America and Citi. I think that if you look at those two institutions, those were part of the stress test. The regulators have gone through, analyzed their balance sheets, analyzed their capital positions, and have given them feedback in terms of what additional capital they need to raise.
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