Treasury Announces Toxic Asset Plan

A public-private partnership that relies on a lot more government money to finance the purchases.

In a lengthy fact sheet, the administration said it plans to use $75 billion to $100 billion from the government's existing $700 billion bailout program for this purpose, and it predicted participation from a broad array of investors ranging from pension funds and insurance companies to hedge funds.

To achieve the goal of freeing up more lending, the program would entice private investors with low-cost loans provided by the Federal Deposit Insurance Corporation and the Federal Reserve. The government would also shoulder the vast bulk of the risk.

In one example used in the fact sheet, the purchase of a batch of bad mortgage loans would see the private investor put up 6 percent of the cost with the rest provided by the government, with the FDIC covering 84 percent of the cost with a loan and the remaining 6 percent coming from funds from the $700 billion bailout program.

Timmy's WSJ op-ed announcing the plan is here.

You know, the government might have an easier time getting private money into the plan if it hadn't spent the last week demonizing the people with the money to participate and passing 90% retroactive taxes on unpopular groups. Just saying.

posted by DrewM. at 08:46 AM

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