Geithner's PPIP: Jobs for the boys
Much criticism has been hurled at Tim Geithner during his brief tenure as US Treasury secretary, but no one can say that he is not doing his bit to counterbalance job losses on Wall Street.
In announcing his Public Private Investment Programme (PPIP) last month Geithner joined a rarefied club: he is actually looking to hire people in the financial services sector.
The job spec is pretty clear. Tim is looking for five asset managers to run his public-private investment funds. Successful candidates must have demonstrated the capacity to raise at least $500 million of private capital; demonstrated experience investing in eligible assets (the polite term for toxic mortgage securities), including through performance track records; have a minimum of $10 billion (market value) of eligible assets under management; have demonstrated operational capacity to manage legacy securities (PPIFs) in a manner consistent with the US Treasury’s stated investment objective while also protecting taxpayers and be headquartered in the US.
Top of most insiders’ list of likely successful candidates are Pimco and BlackRock, ranked number one and two in fixed-income asset management with $563 billion and $511 billion of assets under management respectively. And yes, that is the same BlackRock that purchased $15 billion of distressed mortgage assets from UBS in May 2008 at 70c on the dollar – assets that are now trading at 39c and on which a $350 million equity investment has been completely wiped out.