Officials Refuse to Provide Details on Secret Previous Bailout

Fed made $30 billion deal to manage assets of the collapsed Bear Sterns.

ByABC News
October 1, 2008, 4:24 PM

October 1, 2008— -- Top government officials are refusing to provide details on a secretive deal it made to manage billions in assets from an earlier bailout.

Sen. Charles Grassley, R-Iowa, has been pressing top officials for months to provide details on a deal the Federal Reserve made for a private firm to manage $30 billion in financial assets from the collapsed investment bank Bear Stearns, as part of an arrangement to facilitate J.P. Morgan Chase's purchase of the bank in March.

The Federal Reserve announced at the time that it had contracted with BlackRock Financial Management Inc. to manage the assets. Since then, it has declined to share any further details on the arrangement with anyone – not reporters, not the public, and not Sen. Grassley.

"When will I receive answers to the rest of my questions posed two-and-half months ago?" Grassley wrote to Fed chairman Ben Bernanke and Treasury Secretary Henry Paulson Sept. 23, asking for an update on the value of the assets and other details of the deal.

In his letter, Grassley pointedly noted his need for timely answers in light of "the continuing financial crisis where more transparency is being promised," and the urgent press from the administration for lawmakers to approve a massive bailout program.

Grassley's office confirmed to ABC News Wednesday afternoon it had not received any new information on the deal.

A spokesman for the Federal Reserve said he did not know the status of any congressional request. The spokesman, Andrew Williams, declined to share any information on the arrangement with BlackRock, saying, "Our general principle is we don't disclose contracts we make with outside contractors."

A spokeswoman for BlackRock also declined to speak about the deal. "As a matter of policy we don't comment on client activity or client accounts," said BlackRock's Bobbie Collins.

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