Commentaries

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We’re from Wall Street, and we’re here to help

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Eric Lipton of The New York Times has a fascinating tale of Washington and Wall Street getting perhaps a little too cozy for their own good, detailing how BlackRock and Goldman Sachs went out of their way to try make themselves, er, ah, useful to Charles Millard after he was appointed by President Bush to run the Pension Benefit Guaranty Corp. The clear implication is that the attention the firms gave to Millard was intended to help win contracts managing billions of dollars in retirement funds.

But David Zaring on the Conglomerate blog wonders what all the fuss is about.

What happened was that a Lehman veteran got appointed to head the pension insurer by President Bush, decided to bring in some outside talent, about which the outside talent evinced enthusiastic interest. By talking to the guy wherever they could – even, gasp, on Sundays. And by providing him with some free information. Some might call that business, to the Times, it’s a scandal. Suggesting that it would be better to leave pension management to colorless bureaucratic lifers who never talk to anyone.

Whether any legal or ethical lines were crossed may be unclear, but the Times article portrays Millard, who left the PBGC in January, as being oblivious to the perception of possible conflicts. Indeed, despite having a background on Wall Street and in New York City government, Millard comes off looking like a bit of a rube, as in this email exchange cited by the Times:

“I just became head of the pension benefit guaranty corp in dc appointed by pres bush,” he wrote in a June 2007 e-mail message to John S. Weinberg, a vice chairman and a member of the family that has helped run Goldman since the 1930s. Mr. Millard told Mr. Weinberg, a longtime acquaintance, that he wanted to revamp the agency’s investment strategy.

Blonde ambition thwarted

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Like most of the City of London, I’ve been fascinated with Amanda Staveley for some time. Ever since she burst onto the scene last autumn as the go-between in the 3.5 billion pound investment in Britain’s Barclays by Sheikh Mansour bin Zayed al-Nahyan, the Abu Dhabi prince, she has sparked admiration and scepticism in equal measure.

Reports that she earned a 40 million pound fee for her role in the deal sparked a frenzy of (largely positive) press coverage which gleefully revisited her past as, among other things, a former model and one of Prince Andrew’s former girlfriends.

Fink reaches for Wall Street’s crown

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Matthew GoldsteinYou have to marvel at the seemingly Midas touch of Larry Fink.

The BlackRock Inc. chief executive avoided taking over the helm of Merrill Lynch — something John Thain probably wishes he had done. Fink’s firm emerged from the financial crisis as the Federal Reserve’s favorite private money manager, with BlackRock getting the lion’s share of the government’s work for managing troubled assets. And the $13 billion deal Fink just reached with Barclays Global Investors has turned BlackRock into the outright titan of the asset management world with $2.7 trillion in other peoples’ money under management.

It’s often been said Jamie Dimon is the new king of Wall Street. But one can argue that the 56-year-old Fink, who started BlackRock as a small bond investment shop two decades ago, can also rightfully lay claim to that honor. Even as the Obama administration is about to announce its plan for managing so-called “too big to fail” financial institutions, Fink’s BlackRock is getting bigger and more consequential than ever.

Who is the Fed accountable to?

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It’s pretty clear the Federal Reserve is going to emerge as the big winner in the Obama administration’s proposed overhaul of the financial regulatory system. But any grant of new powers to the Fed must come with legislation requiring greater accountabilty from the nation’s central banker.

Now this is not meant to knock the job the Fed has done in the current financial crisis.  In many respects, Fed Chairman Ben Bernanke should be applauded for showing a willingness to improvise and come up  with creative solutions for trying to limit the damage to the banking system and the economy. But throughout the crisis, Benanke &  Co. have shown an utter disdain for transparency and full disclosure.

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