Is Pimco Too Powerful?

" Earlier week goes by the markets don't hear from giant bond firm Pimco or its chief investment officer Bill Gross gross is a big player in the bond market probably v.'s biggest player in the world. And he runs the largest mutual fund the world as well the Pimco total return fund. That fund had a pretty good -- wait returning nearly 5% positive last year while nearly every other mutual fund took a big hit. Much of Pimco the investments are in mortgage bonds the firm. Is also though just want to for companies picked helped run the government's 500 billion dollar mortgage repurchase program. In other words -- Pimco a little too close to the government and its programs for comfort joining us now to discuss and debate. Peter -- Peter Cohen and associates. Peter recently wrote about this last week and I see also fortune magazine wrote about it as well so other people may be following your lead on this what do you think Peter."

" Well fortune did interview me for that article and I think -- growth is simple case of insider trading. -- you know if I was advising you to tell your company at twenty dollars a share but it was trading at ten. And then I have to buy up all the shares and then invited to -- twenty and you fill it funny I do pretty well for myself. But that's a very conflicted position to begin. And I think the bottom line is that Bill Gross is in the same position except since it's government securities for some reason it's okay and since he's a huge buyer it makes it all right."

" Well I mean -- some ways is as even a fortune article said he's almost like a partner but I but I will all defended -- take the other side -- that we we have guests on all the time. Most of them the other fund managers we try to get the guys in the women who won the most money could they have. The most sway over the market that's the way it works but how -- we define the line."

" Well I think the line is you know we need him to buy those securities we need is cash. But I don't think we should also give him a contract. To run the 500 billion dollar mortgage backed security program and the 250 billion dollar commercial paper program we should be letting him advise the government we can probably find somebody else to advise the government and let him keep buying I think that's the line that that we shouldn't be allowed to grow --"

" He is considered you don't have to be building times -- the smartest guys out there he's been right a lot. Do you think he's right because he's smart -- he's right because he's big and smart and has some sway or some sort of middle combination. I think he's right because he's big and smart and he knows what's going on before everybody else because he's dictating policy. So I think he's crossed the line I mean what do you think that's very interesting if you look at what happened if you read and that fortune article. They said that he raised his proportion of the total -- from twenty to 60% in -- bonds and then a few weeks later he he advised the government to put Fannie and -- and conservative -- the stock and boosted the -- his bonds by something like 45%. I -- this is classic -- dictating terms of the government that happens to enrich him and I -- think there's a -- and it's been -- there I think he should be allowed to continue to play in the market as a buyer but not as an -- in the US -- on both sides -- because you simply want -- going there right anywhere -- certain we're desperately certainly being -- on these assets at least they're -- it. We need him to -- those assets but I don't think we need and the by the essence so much that we give him an opportunity to put his finger on the scale when it comes to setting the price of and he profits from. It'll -- then it would. How does the government -- general tapped the smartest woman in men. You know the people actually do it for a living right we always criticized the people who were picked for positions in government which they have. -- a thing you know actual experience. So they hear the guys got you know more experience in just about everybody. He knows the market better and about anybody out how we. Accomplish both goals I guess what I'm trying to say. Well I think he's not the only way out there for example I think BlackRock is very good at this and you know I don't know all the other players but I'm I'm quite sure that he's not the only one although -- he's very smart he's articulate. And he he writes well I think there are other people out there who -- by the government and not be in this -- position I think that. We need we need to tap those other people and make sure we don't have this. This kind of conflict than it is just too much I want to keep it on Pimco but very quickly -- blogging stocks yet another article out today about the methods I think it's very appropriate. Saying if so the fear message that we're getting out of the current White House to sort of smacks of the Republicans and George Bush sort of making us afraid to say we gotta going to Iraq as we got WMD's there. You know and Hank Paulson pushing through guitar you know why can't the government is what a Republican or Democrat. Learn how to deliver a message. That is not based on fear. We see we get I don't feel any campaign. Why did changed a 180 degrees. I don't know why it changed I can't defend that because but I like to see is sort of a rational analysis of how do we get here. And how we gonna get out of it. You know kind of take -- sort of make it like a road -- so that you know every month if we're making progress on the road to our destination you can show us where where we were how we got to where we are now where we're going next and -- give us a sense that you've got an idea what the big picture is I really think the American people are smart enough to know. That this is not something it's a black or white situation and I think we should work on that."

" Peter Cohen thank you very much for insight we appreciate it. Thank you Peter by the way is the author of you can't order change where he spent a lot of time with CEO of Boeing Jim McNerney -- great management book. Here's a management roster as well she can't order change lessons you can learn from Boeing's turn around -- his Peter most recent book are."