Tuesday, May 19, 2009

Halliburton then, BlackRock now?

Every crisis has a silver-lining for a "select" few. Halliburton profitted from the invasion of Iraq. Now a little know money manager BlackRock, has emerged as a "suspiciously ubiquitous" advisor, contractor and fund manager for the massive US banking bailout plans.

It now manages $1.3 trillion in assets for big private clients, including hedge funds and foreign governments. It has won contracts to manage the rescues of Bear Stearns, Citigroup, and AIG, besides a contract to help Fannie Mae and Freddie Mac. The all-pervasive role of BlackRock in bailouts has raised questions about whether "its roles as government adviser, giant federal contractor and private money manager will inevitably collide".

As NYT asks, "Can a company that is being paid to price and sell troubled assets for the government buy the same kinds of assets for private clients without showing preference? And should the government seek counsel from a company whose clients stand to make or lose billions if those policies are enacted?"

BlackRock is expected to be one of the primary private beneficiaries in the Public Private Investment Program (PPIP), the $1 trillion federally subsidized plan to purchase troubled assets from banks in parnership with private investors. In any case, if even recent history is any indicator, there may be many skeletons waiting to tumble down from the BlackRock cupboard!

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