The Treasury Department announced modifications Monday to its plan to restart the market for toxic assets weighing on bank balance sheets, including an extended application deadline for a securities program and new clarifications about participation criteria.

Because of some confusion expressed by market participants, the Treasury also said the "legacy securities" portion of its program for toxic assets is separate from the Federal Reserve Board's Term Asset-Backed Securities Loan Facility. Though the two programs work together, "they remain separate," the Treasury said.

The Fed's facility, which is also aimed at boosting the market for legacy securities, will have its own set of terms, conditions and requirements. However, participation does not prohibit an investor from taking part in the Treasury's program, the department said, and funding for legacy assets is available to a broad range of market participants.

The updated guidance is aimed at potential investors and participants in the legacy securities part of the Treasury's two-pronged Public-Private Investment Program, which aims to address the loans on bank balance sheets. Under the "legacy loans" part of the program, the Treasury will support the purchase of troubled loans, while the Federal Deposit Insurance Corp. will provide a guarantee for debt financing.

Under the legacy securities portion, the Treasury will make co-investments available to support the market for mortgage and asset-backed securities originated before this year.

Initially, the Treasury had said it would approve up to five asset managers for the securities program, but on Monday it suggested being open to considering more managers.

Last month the Treasury said fund managers would be prequalified according to certain criteria, including the ability to raise capital, demonstrated experience investing in eligible asset classes and a minimum threshold of eligible assets under management. On Monday, however, the Treasury made it clear that not meeting all the criteria would not necessarily disqualify a proposal.

The department also said it is particularly interested in getting small, minority-owned and women-owned businesses to participate.

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