Paulson Recruits Asset Managers as Rescue Moves Ahead (Update1) By Rebecca Christie and Robert Schmidt
Oct. 3 (Bloomberg) -- Treasury Secretary Henry Paulson is hiring as many as 10 asset-management firms to join the lawyers and bankers he is recruiting to jumpstart the government's new $700 billion bank-rescue program. Paulson is seeking to assemble a team to determine which toxic securities to target, how to value them and how to arrange purchases. ``This is something that, for a typical company, would take no less than five years,'' said Lynn Turner, a former chief accountant at the Securities and Exchange Commission. ``Anyone who thinks they can do this in two weeks is insane.'' Already, BlackRock Inc., Pacific Investment Management Co. and Legg Mason Inc. are seeking to become money managers for the program, people familiar with the matter said. The three firms have been informally advising the Treasury as it negotiated the bailout package with Congress, the people said. The Treasury plans to hire about two dozen employees along with five to 10 asset-management firms. The Emergency Economic Stabilization Act of 2008 gives Paulson immediate authority to buy as much as $250 billion in troubled assets from banks and other financial institutions. The White House may expand the program by another $100 billion, and the Treasury can access the remaining $350 billion with Congressional consultation. The plan sets up a Troubled Asset Relief Program, or TARP, available to ``any financial institution'' that meets the Treasury's conditions. Residential and commercial mortgages and mortgage-backed securities are the primary targets, although the Treasury and the Fed are able to add other asset classes as needed. The Treasury also will set up an insurance fund for mortgage securities that will charge premiums. Banks won't be allowed to sell assets to the Treasury for more than what they paid, unless they purchased the assets from another bank already in bankruptcy or conservatorship. Congress instructed the Treasury to issue conflict-of-interest guidelines, so banks don't take unfair advantage of the new program. Because the Treasury is able to buy whole mortgage loans under the plan, it may be able to encourage mortgage servicers to work out easier repayment arrangements for strapped homeowners, although the mechanics are likely to be very difficult, said Michael Carliner, a consultant and former economist for the National Association of Home Builders, a trade group in Washington. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;207172674;29440083;f Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:272349 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
