Bond-fund giant adds another: Mr. Greenspan

Bill Thompson, the chief executive of Pacific Investment Management Co. (Pimco), was so eager to hire Alan Greenspan that he did something unusual last September.

He wrote the former Federal Reserve chief a letter. By hand.

The missive so struck Greenspan that he phoned Thompson immediately.

"He said, 'I couldn't resist calling you because it's seldom that I get a letter like this,' " Thompson recalled.

It was a small gesture in a yearlong courtship that paid off recently when Pimco disclosed it had hired Greenspan as an outside consultant.

Greenspan will advise the Newport Beach, Calif.-based bond-fund giant on economic and monetary policy in his first consulting gig since he left the Fed in January 2006.

The 81-year-old economist has received numerous offers from investment banks, hedge funds, private-equity shops and others on Wall Street and in corporate America, according to people close to him.

"When Dr. Greenspan left the Fed, he received more offers than I've ever received for anybody other than former President Clinton," said Robert Barnett, a lawyer for the ex-Fed chief. "It seems that everyone would like him to be part of their efforts."

Greenspan, through a spokeswoman, declined to comment.

Pimco would not disclose the terms of its accord with Greenspan, except to say it was a multiyear deal.

An economic consultant early in his career, Greenspan brings two things to Pimco, experts said: unmatched credentials in divining global economic currents and — perhaps more important — marketing cachet that could help lure business to Pimco.

Greenspan will visit Newport Beach four times a year for quarterly forecasting sessions, Thompson said. He also will consult with Pimco investment managers, including Bill Gross, who runs the flagship Total Return bond fund.

The fund has trailed most of its peers for much of the past year, according to Morningstar.

That's due in part to Gross' caution about the economy. He has been unwilling to bet heavily on high-yielding corporate bonds, believing they're not worth the risk that they will lose value if the U.S. economy slows further.

Greenspan, who spent much of the past year writing a book due in September, is sifting through other consulting offers. He expects to work for fewer than a dozen clients, a person familiar with his thinking said.

Pimco's courtship began when Thompson and Gross broached the idea to Greenspan at a Pimco investment conference in Dana Point, Calif., in March 2006. Greenspan said he was tabling any offers until he finished his book.

But Thompson followed up with his letter six months later, and the broad contours of a deal were in place by March, he said.

Thompson said he didn't realize how coveted the former Fed chief was until someone in Greenspan's office told him Pimco had "won the sweepstakes."

Some experts question how much special wisdom Greenspan can offer given that the central bank is now run by Ben Bernanke.

"To be blunt, I think it's marketing," said Barry Ritholtz, head of an economic-consulting company in Glen Cove, N.Y. "I don't know what insight he brings."

Thompson, calling any marketing boost a "byproduct," said Pimco pursued Greenspan for his knowledge and experience.

"His crystal ball may not be better than ours, but it gets a lot clearer when you can tap into somebody like Alan Greenspan," Thompson said. "He's just a unique person in our era."

Greenspan has remained popular despite being out of office for more than a year, said Bill Leigh, owner of a speaker's bureau and a literary agency based in Somerville, N.J.

Greenspan reportedly commands $150,000 for a speech, but Wall Street consulting pays better.

"That's where the real money, the real influence, is," Leigh said.

Times staff writer Tom Petruno contributed to this report.