Waxman Asks Fed for More Details on Decision to Hire BlackRock

[flashl]

April 7 (Bloomberg) -- A congressional panel has asked the Federal Reserve for details on its decision to hire BlackRock Inc. to manage $30 billion in assets backed by a federal loan in the JPMorgan Chase & Co. buyout of Bear Stearns Cos.

House Oversight and Government Reform Committee Chairman Henry Waxman released a letter today asking New York Federal Reserve Bank President Timothy Geithner to explain how officials decided to pick BlackRock, the terms of their agreement with the firm and what plans the Fed has to oversee its handling of the portfolio. Waxman, a California Democrat, said he wants the information by April 18.

...

"It appears that BlackRock is serving as a government contractor providing complex financial services to the Federal Reserve,'' Waxman said. "If BlackRock does its job well, the taxpayers will be made whole or even experience a gain. If BlackRock is not successful, the taxpayers stand to lose billions of dollars.''

The Fed, attempting to stave off the bankruptcy of Bear Stearns, agreed to take illiquid assets off the company's balance sheet in order to encourage JPMorgan to buy the firm. Most of the investments were mortgage-backed securities and "related'' items, the Treasury Department said in a March 28 letter to Senate Finance Committee staffers. BlackRock will attempt to sell the assets to pay back the Fed and JPMorgan.

Bloomberg

This BlackRock?

BlackRock Falls After Credit Suisse Recommends Shorting Stock
Some Distressed Debt Investors Are Buying, But Mainly Mortgages

In late March, BlackRock Inc. (BLK) and hedge fund firm Highfields Capital Management unveiled new $2 billion vehicle called PennyMac that will buy distressed home loans.