Troubled Asset Relief Program Asset Management
Bank of New York Mellon emerged as one of the credit crunch’s benefactors when it was named the master custodian firm overseeing the Treasury Department’s bailout fund (the Troubled Asset Relief Program, or TARP)on Oct.14 2008.
As master custodian bank it will manage the toxic assets that the government will buy with taxpayer’s dollars, and also run auctions when they are sold for cents on those taxpayer dollars.
BONYM’s official title is “prime contractor of the purchase program.”
This is not only prestigious for Bank of New York Mellon, but will also bring in significant Asset Management revenue. The bank already keeps track of $23 trillion of dollars of assets in its role as corporate trustee for pension funds and others, so it should have no trouble managing $700bn.
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Losing finalists in the tender were said to be Bank of New York, Citigroup, Wells Fargo and State Street. Let’s hope the politicians made the right commercial decision – not something they are usually very good at.
The mandate for securities asset manager to sell and keep track of the troubled mortgage-backed securities remains open, and does the role of whole-loan asset manager to oversee individual mortgage loans it buys from banks.
It looks like banks will have more luck making money out of the troubled assets relief program than trying to find recession proof businesses in this market.
