Wednesday, May 6, 2009

An Action Plan for Troubled Assets

The $1 trillion Geithner public-private partnership investment plan offers a broad framework for using private-sector capital to enable price discovery and government-backed leverage to boost returns. Policy-makers hope the effort will move troubled assets off the balance sheets of banks.

By Robert Stowe England

Mortgage Banking

May 2009


Firefighters sometimes start a controlled fire ahead of a raging forest fire. The idea is to have the staged fire burn toward the dangerous out-of-control fire with the goal of stopping its advance by denying it a way to spread toward a protected target.

In a similar move, a new federal program -- the $1 trillion Public-Private Investment Program (PPIP) -- is designed to use leverage and the lure of very high investment returns (the proximate causes of the financial meltdown) to help begin to undo the damage done to the financial system, to banking and to the mortgage markets.

Here is a link to a read-only version of the story as it appears in the May issue of Mortgage Banking: http://robertstoweengland.com/documents/MBM.5-09AnActionPlanforTroubledAssets.pdf

And here is a link to a printable text-only version of the story: http://robertstoweengland.com/documents/ActionPlanForTroubleAssets.pdf

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