No-brainers and surprises were among the Treasury Department's list of nine money managers — plus their partners and subadvisers — picked for the Private-Public Investment Program, consultants said.
Through PPIP, the government is enlisting money managers, as well as 10 minority and women-owned businesses to serve as partners, to help banks sell off their toxic assets, which include commercial and residential mortgage-backed securities that have plunged in value, resulting in huge losses.
PPIP provides that for every dollar raised by managers, the government will offer matching funds, up to a total of $10 billion. It also will offer an additional $20 billion in debt financing.
BlackRock already serves as a government adviser in the rescue of Bear Stearns & Co Inc. and American International Group Inc. John Wasnock, director of manager research for Wurts & Associates, Seattle, pointed out that BlackRock's depth and experience in fixed income made it a good fit for PPIP.
“The government is looking for big firms to do this,” he said. “Size was a huge factor.”
Other heavyweights on the Treasury Department's list are AllianceBernstein LP and its subadvisers Greenfield Partners LLC and Rialto Capital Management LLC; Invesco Ltd.; TCW Group Inc.; RLJ Western Asset Management LP; and Wellington Management Co. LLP.
Keith Berlin, vice president of global fixed income and credit at Fund Evaluation Group LLC in Cincinnati, said most of the firms have a solid reputation in residential mortgage-backed securities, but he was thrown off by a couple of names on the list, such as Oaktree.
“Oaktree was a surprise,” he said. “You don't think of them as a mortgage-backed specialist — they do distressed corporate (bond investing). But Oaktree has the capacity to raise cash.”