Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Is PIMCO Setting Up Another Conflict Of Interest?

Welcome to Lawrence Delevingne of Clusterstock!

Is PIMCO Setting Up Another Conflict Of Interest?

bill gross generic pimco tbiCourtesy of Lawrence Delevingne

PIMCO was already scary big, but now the fund has even more power.

The bond king has signed on with the New York Fed as a Term Asset-Backed Securities Loan Facility (TALF) "collateral monitor." That means that PIMCO will have say in valuating assets that affect its own portfolio.

As the Project on Government Oversight writes:

"These collateral monitors have an important job: if PIMCO or Trepp determines that an asset posted as collateral will perform poorly under certain economic conditions, the New York Fed might decide to decrease its loan to that borrower. So you’d think that the New York Fed would want to pick a collateral monitor that could provide independent, unbiased advice on the valuation of these assets, right?

As it turns out, however, PIMCO may already have a deeply entangled stake in many of these assets, thanks to its involvement in multiple bailout programs as well as its own private investments. Although PIMCO surprised many last month by withdrawing its application for the Public Private Investment Program, it’s still serving as an asset manager for the New York Fed’s agency mortgage-backed securities purchase program and Commercial Paper Funding Facility. And as of June 30, 2009, PIMCO is managing $982,636,884 in total net assets under its own Mortgage-Backed Securities Fund."

Now, as POGO notes, PIMCO isn’t accused of any blatant misconduct — the NY Fed prevents TALF collateral monitors from decision-making — and hiring them makes sense given their asset management prowess. But like BlackRock, PIMCO is another example of groups with skin in the game helping run the government’s bailouts.

See Also:

Bill Gross: PIMCO Will Manage Bailout Fund For Free

Obama’s Bank Plan Is A ‘PIMCO Bailout’

Why PIMCO Would Overpay For Bank Assets

 


Tags: , , , , ,

Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!