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U.S. government to buy up toxic assets via public-private partnerships.(Inside Track)(Brief article)

The New American

| April 13, 2009 | COPYRIGHT 2009 American Opinion Publishing, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

The Obama administration's long-awaited proposal to remove so-called "toxic" mortgage-backed assets from U.S. banks was finally unveiled on March 23. According to details of the plan, the government will form public-private partnerships to buy up the assets, putting up $7 in cash and $86 in government loans for every $7 spent by private capital pools like hedge funds. The expectation is that, once the markets begin to rise and these mortgaged-backed assets recover their value, both taxpayers and private investors stand to gain. Should the assets lose further value, of course, both investors and taxpayers will be on the hook--mainly taxpayers.

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The federal government will tap the Troubled Asset Relief Program for up to $100 billion, and rely on private investments, the FDIC, and (of course) the Federal Reserve for a total of $500 billion. However, ...

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