Monday, March 2, 2009

Bill Gross En Route To Becoming 4th Branch of Government

The most flagrant abuser of conflicts of interest in the current economy, PIMCO (relax, relax, we jest), has just gotten its tentacles even more entangled with the rotor of the government's economic shredder. Reuters reports Bill Gross has been hired to advise the U.S. government on the $118 billion of assets guaranteed in the Bank of America bailout. Pimco will be responsible for "evaluating Bank of America's holdings, including securities backed by residential and commercial loans, to help determine the company's losses."

The world's largest bond fund is opportunistically prepared for just these kinds of assignment, by recently raising a $3 billion distressed DISCRETIONARY fund for mortgage-backed security investing. This of course happened after PIMCO was selected for a comparable assignment, where it was picked to advise on $80 billion of credit union deposits. We fully expect Gross in his next monthly letter to announce the creation of a distressed fund investing/shorting Bank of America securities. But, of course, everything in Newport Beach is walled off from everything else. Last time we checked El-Erian was personally putting up chinese walls within the Sharkeez booths in Newport Beach. Sphere: Related Content
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Tyler Durden said...

comments should be kept on topic.

Donald Pretari said...

How did Gross miss the Flight To Safety in US Treasuries? I've assumed that he didn't think Lehman would be allowed to fail. Since then, he's been on a roll, betting on a full government guarantee. The conflict of interest is a possible time bomb if these investments fail and Pimco still makes a ton of money. Isn't this a bad brew?

Don the libertarian Democrat

Tyler Durden said...

he is all over treasuries, but his proximity to government policy, and now being an active advisor on, is very troubling.

Mark said...

lol @ title