Big conflicts of interest for PIMCO, BlackRock?

Pacific Investment Management Co. and BlackRock, two esteemed asset management firms, have raised lots of money with an eye on profiting from distressed securities. California-based PIMCO raised $3 billion for a distressed credit fund to invest in mortgage-backed securities, reports Bloomberg. But both firms have also inked deals with the U.S. government to advise it on various distressed securities. PIMCO has been hired to advise the government on about $118 billion in debt that it now guarantees. BlackRock manages more than $80 billion in various toxic assets previously owned by Bear Stearns and AIG.

"Pimco and others potentially have two masters to serve: The U.S. taxpayer and their own fiduciary obligations to clients," Rep. Scott Garrett, a member of the House Financial Services Committee, told the news service. Neither firm is commenting, but we can expect that they'll set up some firewalls and such. Whether that will appease is the critics is unclear.   

For more:
- here's the Bloomberg article

Related Articles:
PIMCO news from FierceFinance
BlackRock news from FierceFinance

Post a comment