Is PIMCO Too Big?

by: Mike Steinhardt

I am not suggesting that PIMCO hasn’t earned its size or that it is unstable - note that I did not say “Too Big to Fail” in my title despite the Fannie / Freddie bailout. I would have no desire to evaluate that and I am not qualified as I don’t do much with the fixed income world other than analyzing the broad implications of debt instruments on the general economy and what that means for stocks.

My title has more to do with them being too big for their britches. I am just more than a little concerned about a weird feeling I have every time Bill Gross, Mohamed El-Erian, Paul McCulley or William Thompson appear on CNBC, Bloomberg or any other media outlet that have annointed PIMCO as the leading authority on the credit markets.

It’s more than just their blatant book talking or their ass-kissing of politicians and especially their constant endorsements of government bailouts and interventions. I just get this strange feeling that PIMCO is way too involved in politics. I know they are the biggest (and supposedly the best) fixed income guys and their understanding of these markets in a time of extreme confusion with global credit markets might be something that clueless politicians would want to hear.

But there comes a point were advice conflicts with influence and coordination. No one elected these guys. No one appointed them to a regulatory role. Does anyone dare wonder how many times PIMCO has met with politicians during the past year and what was said and then what was done?

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