Former Federal Reserve Chairman Ben Bernanke has scored his second advisory gig in the past month. He recently announced he’d advise hedge Citadel LLC. Now he’ll also offer his economic expertise to money management giant Pacific Investment Management Company, or Pimco.
It manages about $1.6 trillion in assets for public and private retirement plans, among other customers.
Bernanke will advise Pimco following a period of turmoil at the firm. Investors pulled money from Pimco funds after co-founder Bill Gross left last year.
Bernanke is the second high-profile economist the firm has recently hired to burnish its macroeconomic forecasting credentials. And Bernanke’s familiarity with Fed personalities and decision-making could be an added benefit.
"All markets, all security prices, are impacted by what the Fed does, what the Fed may do, and what it’s thinking,” says Jim Paulsen, chief investment strategist at Wells Capital Management, a Pimco competitor.
Paulsen says Bernanke could give Pimco especially pertinent insights into the conditions under which officials would raise interest rates.
“It would be very important information flow for asset managers that are going to lay down bets on what the direction of interest rates is,” Paulsen says.
But Bernanke's advisory role at Pimco makes Russell Campbell uncomfortable. He's the chief executive of Your Second Opinion LLC, which consults with small asset management companies.
“It raises policy implications about who's influencing who and who has direct access,” he says. “He can probably pick up the phone and call the president. There's only so many people that can do that.”
The Securities Exchange Commission, not the Fed, oversees Citadel and Pimco. Bernanke could not be reached for comment about his pay at either appointment.
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