WASHINGTON — The Treasury Department announced it will invest up to $30 billion in a partnership with private investors to buy toxic securities from banks.
The Treasury has selected nine firms to act as fund managers and they will have to raise an initial $500 million each in order to qualify for government financing.
The program is significantly smaller than the Obama administration initially envisioned, in part because the health of the banking industry has improved and because investors are wary of partnering with the government.
The nine firms, selected by a committed that comprised career staffers at the Treasury Department are BlackRock Inc., Invesco Ltd., AllianceBernstein LP, Marathon Asset Management, Oaktree Capital Management, RLJ Western Asset Management, the TCW Group Inc., Wellington Management Co. and a partnership between Angelo, Gordon & Co. LP and GE Capital Real Estate. The Treasury Department was under pressure from Congress to include smaller firms, not just the largest money managers in the country. It has also picked 10 small, veteran, minority, and women-owned firms to partners with the selected fund managers. These firms include CastleOak Securities, Muriel Seibert & Co. Inc., Blaylock Robert Van and Altura Capital Group.
The program, known as the Public Private Investment Partnership, or PPIP, will focus on helping banks sell real-estate related investments, initially targeting commercial and residential mortgage backed securities. It is unclear how large the program will be, in part because it is unknown how much money the fund managers will be able to raise. The program could grow and Treasury may select additional fund managers beyond this first group.