So, how much are the four firms hired to manage the Fed’s mortgage-backed securities purchase program getting paid for their work, and how did they get the contracts in the first place?
They’re not saying.
We called Blackrock Inc., Goldman Sachs, Wellington Management, and PIMCO to ask them about their recently announced contracts to manage a total of $500 billion worth of mortgage-backed securities, on behalf of the Federal Reserve. Spokespeople for the first three firms told us they were referring all questions to the Fed. Representatives for PIMCO — whose founder said in September that his firm would manage a very similar Treasury program for free, out of patriotic duty — have not responded to two messages.
A spokesman for the New York Fed told TPMmuckraker he’d get back to us with more information.
“The selection of these managers seems incredibly opaque,” Jeffrey Gundlach, the chief investment officer for the invesment firm TCW, and an expert in mortgage-backed securities, told TPMmuckraker.
Indeed, the Fed has so far provided little detailed information on the process by which these firms were selected. In a fact sheet posted on their website, the Fed wrote:
Because of the size and complexity of the agency MBS program, a competitive request for proposal (RFP) process was employed to select four investment managers and a custodian … The selection criteria were based on the institution’s operational capacity, size, overall experience in the MBS market and a competitive fee structure.
We’ll keep you posted on what we learn from the Fed…