Bill Gross is to the Hanke Panke as a gold-digger is to a hedge fund manager (well, used to be).
Regardless, the Pimco head is volunteering to manage part of Paulson and Bernanke’s proposed $700bn bailout – for free.
From the New York Times:
‘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 the Pacific Investment Management Company, said in an interview at the company’s headquarters here.
Mr. Gross says that all he wants in return for helping the Treasury Department is for Pimco ‘to be recognized for the way we’ve seen this crisis coming, and for the way we’ve talked about what’s required.’
How generous. I guess if we’d made $1.7bn from government bailouts, we’d want to give something back too.
As someone rightly points out in the NYT article, putting Gross in charge of part $700bn may not necessarily be in the best interest of the American taxpayer, or anything non-Pimco for that matter:
Luis Maizel, a senior managing director of LM Capital Group in San Diego, said the government should instead turn to someone like a former official of the Federal Home Loan Bank Board, which is now defunct, or the Federal Reserve.
‘They should start with somebody who doesn’t have a conflict,’ Mr. Maizel said. ‘Bill Gross is a good friend of mine, but if you put this in Bill’s hands, Pimco is going to come out great and I don’t know that the government will.’
Wow, even his friends are against this.
Still, Gross is saying the US could earn a tidy return (12 to 13 per cent annually) on the assets it buys off banks – if it pays the right price. That would be about 60 or 65 cents on the dollar, according to Gross’s thinking, less than Paulson is currently recommending via hold-to-maturity prices (about 70 cents for Tier A assets, descending to 30 cents for Tier E), we think.