Obama administration unveils $1T Public-Private Investment Program for troubled bank assets

The Obama administration today unveiled its new plan the “Public-Private Investment Program”, to buy up to $1 trillion in troubled bank securities including mortgage backed securities, subprime mortgages, and other derivatives. Initially, the plan is to buy up to $500 billion worth of these securities, but the plan earmarks up to an additional $500 million. Announced today, the Obama administration said it would provide up to $100 billion before committing more money pending review.

Treasury Secretary Timothy Geithner today said, “Simply hoping for banks to work legacy assets off over time risks prolonging a financial crisis,”

Under the Public Private Investment Program, the government will use taxpayer money to push partnerships with the private investors who will buy the toxic assets. Essentially, the plan is designed to remove the toxic assets sitting on the banks’ balance sheets.

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Hercules holds a B.Comm Finance from Ryerson University in Toronto, Canada. He is a Chartered Financial Analyst (CFA) level 3 candidate. He was previously a contributor at FiLife, a finance website owned by Dow Jones and IAC. Write to [email protected]
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