The New York Times reports of the Paulson Bailout, that sub-contractors will do the work of sorting out which poisonous debt accounts the American People are to buy. The understanding is that these consultants will receive a small honorarium for their services, amounting to a sum that is shy of, but possibly not unadjacent to, $7,000,000,000.
"Nice work if you can get it", I hear you cry. But asset management is a difficult line of business, and in the course of their work, these asset managers might be in danger of being on the receiving end of bribes. So it makes sound sense to shower these gallant men with gold, so that they are put above temptation, and can be seen to be so richly paid that they are incorruptible.
"The government will hire only a bare-bones internal staff of about two dozen people with expertise in asset management, accounting and legal issues, according to administration officials, and will outsource the bulk of the program to 5 to 10 asset management firms.
Administration officials said they had not yet selected the list of firms to run auctions or manage the assets. During the last few weeks, the Treasury has informally consulted major firms — including BlackRock, the Pacific Investment Management Company and Legg Mason — but none have been given a mandate, they said.
The selected asset management firms will receive a chunk of the $250 billion that Congress is allowing the Treasury to spend in the first phase of the bailout. Those firms will receive fees that are likely to be lower than the industry standard of 1 percent of assets, or $1 for every $100 under management".