WASHINGTON (AP):

A key House of Representatives Democrat is questioning the Federal Reserve's unilateral decision to let BlackRock Inc. manage US$30 billion (€19.12 billion) in assets as part of the government-orchestrated rescue of Bear Stearns Cos.

Rep. Henry Waxman, chairman of the House Oversight and Government Reform Committee, questioned "the award of this potentially lucrative position to BlackRock without competition" in a letter sent Monday to Timothy Geithner, president of the Federal Reserve Bank of New York.

Securities

The Fed last month agreed to take US$30 billion (€19.12 billion) in securities off the books of Bear Stearns to facilitate the acquisition of the firm by JPMorgan Chase & Co. for US$10 per share, a fraction of the company's share price a year earlier. JPMorgan agreed to assume the risks for the first US$1 billion (€640 million) in losses that might occur, lowering the Fed's potential risk to US$29 billion (euro18.5 billion).

The Fed hired BlackRock to manage the portfolio of securities, mostly backed by residential mortgages. A spokesman for the New York Fed declined to comment on Monday.

BlackRock, led by CEO Laurence Fink, managed more than US$1.3 trillion (euro830 billion) at the end of last year. Merrill Lynch & Co. has a 49 per cent stake in New York-based BlackRock, which has so far avoided the steep mortgage-related losses that have struck Merrill Lynch, Bear Stearns and others.