Here is an interesting twist: PIMCO’s Bill Gross, manager of the worlds largest bond fund, has offered to manage the new $700B+ fund of bailed out, junk assets — for free!
Consider it some giveback from the $1.7 Billion Pimco made the day the US took over Fannie and Freddie, and explicitly guaranteed their paper.
Gross has a Washington Post OpEd today: How Main Street Will Profit.
Hey, why not get Warren Buffett to do it ? Especially if Warren could get us taxpayers some of those same sweet terms he got from Goldman Sachs . . .
"One of the many concerns expressed on Capitol Hill this week about
the Treasury Department’s $700 billion rescue plan was how to keep the
Wall Street firms that helped to create the crisis from making a
killing if they are hired to help contain it.
William H. Gross, the manager of the country’s largest bond mutual fund, has a solution for that: He is offering to do it free.
“We have a large and brilliant staff that can analyze and has
analyzed subprime mortgages that can help the Treasury out,” Mr. Gross,
the co-chief investment officer for Pacific Investment Management
Company, said Tuesday in an interview at the company’s headquarters
here. “And I’d even be willing to say that if the Treasury wanted to
use our help, it would come, you know, free and clear as long as every
other firm would do the same.”
Mr. Gross explained his offer – which he later repeated, without the
caveat about other firms following his lead – as a philanthropic one.
With Pimco’s $830 billion under management, “we make fees aplenty,” he
said. “We’d like to be recognized for the way we’ve seen this crisis
coming, and for the way we’ve talked about what’s required.”
For more than a year, Mr. Gross, whose investment expertise has
earned him a net worth estimated at more than $1 billion, according to
Forbes, has played the role of the financial markets’ Cassandra.
Beginning in July 2007, he warned that subprime mortgage crisis would
get far worse before it got better. Other sectors of the financial
markets, he predicted, also could seize up if the Federal Reserve and
Treasury did not do something to keep markets liquid."
Note, however, that Bill Gross was in fact talking his own book too:
"But Mr. Gross and Pimco have also attracted criticism, most recently
when it became clear that his Pimco Total Return fund earned more than
$1.7 billion on the day the federal government bailed out Fannie Mae
and Freddie Mac.
Mr. Gross had been loudly advocating for such a move for more than a
year, at the same time that was moving more than 60 percent of his
fund’s assets in government-agency bonds. The shift in investment
strategy began in earnest shortly after Pimco hired Alan Greenspan, the
former Federal Reserve chairman, as an adviser earlier last year."
My first choice would be Buffett, but we could probably do worse than Gross . . .
How Main Street Will Profit
William H. Gross
Wednesday, September 24, 2008; Page A23
Managing the Bailout: He’d Do It for Nothing
NYT, September 25, 2008