What Happened Inside the World's Biggest Bond Firm?

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Feb. 25 (Bloomberg) -- Former Pimco Managing Director Bill Powers discusses why Mohamed El-Erian quit Pimco. Powers speaks on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Is the story you did not hear when mohammed stepped down as the ceo of pimco.

A volatile atmosphere is described.


At one point, they squared off with two dozen colleagues.

He reported he said, i have a 21 year track record of investing excellence, what do you have?

The response is, i'm tired of cleaning up your mess.

He used a stronger word than that, when i cannot use on television.

He's a former managing director at the firm, who is now the stated mr.

-- state investor.

Were you surprised?

I am sure you gathered and did your own independent reporting to hear there was a split between them, who have been colleagues for many years.

One of the things you realize is when you are working for a firm who has a founder as strongly in control is bill, at the end of the day, it is his opinion that matters most.

Within a portfolio management company, you have the tension between portfolio managers and the business side.

There were a number of natural possibilities for tension, which could crop up.

I cannot say i fell off my chair.

Autocrat is a very strong word.

Is there that little room for a difference of opinion at pimco?

As you know, pimco is a large global firm.

Many people are contributing to the success, not the least of which who are the new ceo and president, who are extremely capable and who i have worked very closely with for many years.

The deputy cio aussies.

They all carry a lot of weight on their shoulders.

At the end of the day, when there is a critical issue facing the firm, bill will weigh in in a very forceful way and those who disagree do so at their peril.

If mohammed's the partial was unhealthy for pimco and billing knowledge this month, -- this much, he wanted mohammed's takeover, what does pimco's parent, bill gross, the cofounder and chief investment officer, and what to the people he has put in place need to do to ensure this does not happen again?

This sets up a healthy future for pimco.

This is unhealthy.

How does it make the firm healthy?

It is difficult for any one individual.

To square off on issues.

Eventually, bill, through both his position and legacy, will wear the other side down.

You now have a different composition where you have a strong ceo and a very strong and capable president, and six very capable deputy cio's. in many respects, the more power delegated to all of them, and taken from bill, the healthier the future of pimco.

Qwest doesn't still not all come down to bill gross?

If bill is supposed to be contained, if you will, in the investing sandbox, what is the guarantee he does not step out of the sandbox and walk around the rest of the playground?

I am not aware of any new shift containing bills to the investing sandbox.

You will have to educate me as to that.

That was not the case.

Qwest on whose shoulders do -- does the responsibility rest to respect borders and allow management to run the business of the company and allow bill, i guess, to run the investment company act of -- company?

I am sure they still enjoy the ability to self govern without any extension interference.

I do not see that being part of the equation.

What i see is you have the structure now with three important non-business leaders, three important business leaders, and six important portfolio management leaders.

Together, it is a fairer fight than one-on-one.

If three plus 6, 9, or even a majority of them disagree with bill, you have to think it will be a fairer fight than it has been in the past.

Qwest you have seen the tensions play out first hand at pimco.

You were there for 19 years.

To what degree do you think they are responsible for, in particular, total return fund's underperformance last year, not relative to the barclays index, but relative to chief competitors?

Obviously, when you make a pronounced rate call, where your belief is any increase in interest rates will cause the economy, as bill said, to stop dead in its tracks, which is not my view of where interest rates are headed, that statement, when carried through your portfolio, will come at a cost of performance when interest rates are rising.

Do you think he overruled mohammed on that?

You're asking me to guess.

I do not have that insight.

Qwest do you think tensions inside pimco were in any way responsible for the conviction?

Since the positions at pimco were largely consistent with what bill was writing in his investment outlooks, i would have to guess he got his way in the end.

This text has been automatically generated. It may not be 100% accurate.


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