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The Guy Who was Supposed to Save Merrill Lynch Will End Up Saving CitigroupBut It's Not What You Think

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So is this why Larry Fink, the chief executive of BlackRock, either passed up or was passed over for John Thain? Everyone absolutely knew Fink was the number one pick to run Merrill Lynch after Stan O'Neal's ouster but some how the job went to New York Stock Exchange boss Thain. And know we know are entertaining ourselves with the thought that this might have happened because Fink had a task far more important at hand.
Since you already read the headline you know that the task he is taking on is saving Citigroup, but not by becoming it's chief executive. He's already said to have passed up that job too. As it turns out, he's taking a job that may even be more important—managing The Entity, the superfund being assembled in a secret laboratory by Citigroup, Bank of America and JP Morgan Chase.
Last night the Financial Times broke the news that BlackRock, the asset manager 49% owned by Merrill Lynch, is expected to be tapped by the banks to manage The Entity. Apparently Fink has become a strong advocate of the fund and has made BlackRock the leading candidate to manage the fund.
The super fund plans to bailout many of the world's biggest financial institutions by buying up assets from faltering structured investment vehicles. It has come under fire from critics who argue that the super fund is just a way to get the SIV assets even further removed from the balance sheets of banks, so that when they eventually do have to be written down the banks don't have to record the loss. Some have described the fund as a bailout of Citigroup, which is responsible for some of the world's largest SIVs.
"Look. B of A is the Stupid Bank. Citi is the Incompetent Bank. JP Morgan is Villainous," one fund manager affiliated with a large Wall Street firm told us. "The super SIV is Stupid, Incompetent and Villainous."
While the Treasury department, which has backed the fund, and the banks behind it claim that it will be able to hold the SIV assets for long enough for the market to recover from the current credit crunch, many do not expect an appetite for those investments to return to the market anytime soon. In fact, some think the super fund may be designed to collapse after it has safely isolated the balance sheets of the banks that are investing in it.
"These things are worth what they are worth. Putting it in a super fund doesn't change that," the fund manager said. "Eventually the assets will have to be sold off at steep discounts, and the rest written down to nearly nothing at best. The banks know this, which is why they are trying to get this stuff as far away from their balance sheets as possible."

Superfund lines up BlackRock
[Financial Times]