The TARP. Congressmen were told it must pass toute de suite or else the entire economy was at risk. It took them a couple tries, but for a $700 billion bill they did it fast. Now according to The Journal, Treasury is failing to live up to its end of the bargain:
Several hurdles have arisen, including concern over the fees the government will pay asset managers, as well as a lack of manpower at Treasury, said people familiar with the matter. The delays have contributed to investor uncertainty about how effective the rescue plan will be.
Treasury is expected to hire managers soon, possibly as early as this week. In recent days, bond titan Allianz SE’s Pacific Investment Management, or Pimco, has received indications it will likely be accepted to manage assets for the Treasury, said a person familiar with the matter.
Hiring asset managers is central to Treasury’s rescue plan, which partly aims to restart credit markets by purchasing troubled assets clogging the books of financial institutions. The managers will help determine which assets to buy, when to buy them and whether to sell or hold them. Treasury has labored to ensure that each manager it hires is fully vetted, and that all potential conflicts of interest are examined and resolved, these people said.
As for the fees for managers, the article cites a likely range of .15%-.20% of managed assets — perhaps a little bit of a paycut for some. And yet this doesn’t seem to be the issue: “The program’s scope also has presented challenges to Treasury’s limited staff. The department received more than 100 applications and has been fielding dozens of calls from interested bidders.”
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