Blackout

Thanks to Jack Lail's post, I have this little bit of info. to pass on.

Blacked Out

By Chris Carey on October 16, 2008 3:09 PM | No Comments | No TrackBacks

The Treasury Department has hired three outside firms this week to help administer its $700 billion, taxpayer-funded bailout of troubled banks. But some key details of those contracts remain a mystery.

The agreements with Bank of New York Mellon Corp. and Simpson Thacher & Bartlett LLP that the Treasury Department posted on its web site each had blacked-out paragraphs in the sections dealing with compensation.

The government's three-year contract with Bank of New York Mellon does not show how much the company will be paid to act as the master custodian of the bailout fund. The contract says that the bank will be paid a monthly fee, but that fee is blacked out.

The Treasury Department's six-month deal with Simpson Thacher for legal advice on equity purchases in U.S. banks has a value of $300,000. But the contract posted on the Treasury Department's web site Thursday did not show the hourly rates the government will be paying the firm. The figures for all the employee classifications, from partner to legal assistant, were redacted.

One of the reasons that we created BailoutSleuth was to help ensure that the process, including the selection and compensation of contractors, is as transparent as possible.

All three of the contracts that the Treasury Department awarded this week were subject to competitive bidding. However, the legal-services deal was open only to six firms that the government sought out, and just two of them submitted proposals.

The Treasury Department did not respond to our request for comment on the blacked-out portions of the contracts. A spokesperson told other news organizations that the particulars of Bank of New York Mellon's compensation would be revealed sometime in the next few months, when other details are finalized.

Bank of New York Mellon and Simpson Thacher did not respond to our request for comment.

The Treasury Department's third contract, with EnnisKnupp and Associates Inc., had no redactions. That agreement runs for a year and calls for $2,495,190 in compensation -- $2.4 million for labor and $95,190 for travel expenses.

The Treasury Department hired EnnisKnupp to provide advice on its plan to buy distressed assets from banks and investment companies. The firm has a large contingent of employees working on the project, including President Stephen Cummings and other principals, said Harmony Watling, spokeswoman at it headquarters in Chicago.