The federal government is going to begin selling more than $3 billion...

The federal government is going to begin selling more than $3 billion in pension assets it will take over from the District of Columbia Retirement Board tomorrow under a 1997 law aimed at relieving the city of some of its financial pressures. The federal government hired Bankers Trust as the liquidation manager to oversee the liquidation of the domestic and international stock portfolios it took over from the pension fund. Bankers Trust declined to comment and federal government officials were not available. The Treasury Department told custodian State Street Bank to stop securities lending on behalf of the pension fund, and told the affected managers to stop trading securities on behalf of the fund. The fund will drop more than $1.8 billion of its $2.5 billion domestic equities investments; about half of its $791 million international stock portfolios; about 75% of its $1.2 billion domestic fixed income portfolios; and its entire $241 million global fixed income portfolio. It will keep its $68.4 million real estate portfolio and its $89.5 million alternative investments portfolio, and two domestic fixed-income portfolios — $27.5 million, LM Capital Management, and $261 million, Western Asset Management. It will retain $334.4 million in international stocks with Bank of Ireland; $343.4 million of its passive domestic equities with Alliance Capital, and its entire $66.5 million domestic small-cap stock portfolio. It will maintain three other domestic equities portfolios.