April 7 (Bloomberg) -- A congressional panel has asked the Federal Reserve for details on its decision to hire BlackRock Inc. to manage $30 billion in assets held by the Fed after JPMorgan Chase & Co.'s buyout of Bear Stearns Cos.

House Oversight and Government Reform Committee Chairman Henry Waxman released a letter today asking New York Federal Reserve Bank President Timothy Geithner to explain how officials decided to pick BlackRock, the terms of their agreement with the firm and what plans the Fed has to oversee its handling of the portfolio. Waxman, a California Democrat, said he wants the information by April 18.

Andrew Williams, a Federal Reserve spokesman, declined to comment on the letter. A BlackRock spokesman didn't respond to requests for comment.

``It appears that BlackRock is serving as a government contractor providing complex financial services to the Federal Reserve,'' Waxman said. ``If BlackRock does its job well, the taxpayers will be made whole or even experience a gain. If BlackRock is not successful, the taxpayers stand to lose billions of dollars.''

The Fed, attempting to stave off the bankruptcy of Bear Stearns, agreed to take illiquid assets off the company's balance sheet to encourage JPMorgan to buy the firm. Most of the investments were mortgage-backed securities and ``related'' items, the Treasury Department said in a March 28 letter to the Senate Finance Committee. BlackRock will attempt to sell the assets to pay back the Fed and JPMorgan.

`Not Practical'

Federal Reserve Chairman Ben S. Bernanke told the Joint Economic Committee of Congress last week that BlackRock is ``reasonably confident that we will be able to recover the full amount if we dispose of these assets on a measured basis rather than to sell them all at once.'' He told the panel it was ``simply not practical'' to put the job out for competitive bidding given the ``short time period'' for brokering the Bear Stearns deal.

Waxman said he wants to know whether the Fed intends to eventually open up ``this potentially lucrative position'' to bidding to ensure that ``taxpayers are getting the best value for their money.'' He said there is ``no indication'' that the Fed plans to allow others to bid for the job, saying it appears that BlackRock may end up managing the money for up to 10 years.

Pacific Investment Management Co., based in Newport Beach, California, and Western Asset Management, the fixed-income unit of Baltimore-based Legg Mason Inc., are potential competitors.

Waxman said he is also concerned about what he called the bank's ``apparent lack of concrete terms'' with BlackRock, noting that Bernanke told Congress April 2 that the firm is working ``on a fee-to-be-determined-later basis.''

``The committee's investigations have shown that when contract terms are not defined in advance, it is usually the taxpayer -- not the contractor -- who suffers,'' Waxman said.

To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net

Last Updated: April 7, 2008 17:27 EDT