Treasury Hires Bailout Asset Managers

The ""U.S. Department of the Treasury"":http://www.financialstability.gov announced last week that it has selected three firms to manage its portfolio of assets issued by banks and other institutions participating in the Capital Purchase Program (CPP). The assets include senior preferred shares, senior debt, equity warrants, and other equity and debt obligations received by the government in exchange for the bailout money it provided under the bank-rescue program. _(These firms are responsible for the capital injection piece of the program. The asset, or fund managers for the government's Public-Private Investment Program (PPIP) will be chosen through a separate application process.)_
In response to a ""publicly announced solicitation"":http://www.financialstability.gov/about/solicitations.html in November of last year for CPP asset managers, the Treasury received over 200 submissions from interested firms. Following an extensive evaluation process, the Treasury has selected ""AllianceBernstein LP"":http://www.alliancebernstein.com; ""FSI Group, LLC"":http://www.finstocks.com; and ""Piedmont Investment Advisors, LLC"":http://www.piedmontinvestment.com. The Treasury said that by leveraging the professional experience and extensive resources of these investment management firms, it can ensure that taxpayers’ assets are managed in a ""prudent and transparent manner.""
The three firms will immediately begin providing asset management services to the Treasury, including valuing the assets acquired from public and private financial institutions participating in CPP; analyzing the ongoing financial condition, capital structure, and risks of these financial institutions; and advising on and executing transactions in accordance with the Treasury’s investment policy. The agreements with the three firms are effective until April 20, 2014.
The firms selected were chosen from the pool of applicants that have over $2 billion in assets under management. The Treasury said it also intends to hire a group of smaller asset managers from the group of applicants managing less than $2 billion in assets, in order to ensure a diversity of service providers of different sizes and ownership. The Department said it anticipates completing this second round of selections within the next two months.
""AllianceBernstein"":http://www.alliancebernstein.com is a global investment management firm that offers research and diversified investment services to institutional clients, individuals, and private clients in markets around the world. The firm, headquartered in New York City, employs more than 500 investment professionals with expertise in growth equities, value equities, fixed-income securities, blend strategies, and alternative investments.
""FSI Group"":http://www.finstocks.com operates a multi-strategy investment platform focused on the financial services sector. The firm is based in Cincinnati and specializes in financing and investing in banks, thrifts, insurance companies, real estate investment trusts (REITs), real estate operating companies, and other financial services firms.
""Piedmont Investment Advisors"":http://www.piedmontinvestment.com is a professional money management firm specializing in core equity and fixed income management. The company was established in August 2000 and is based in Durham, North Carolina.