A game of hot (and toxic) potato
March 28, 2009
The US has announced details of a plan to buy up to $1 trillion (£686bn) worth of toxic assets to help repair banks’ balance sheets.
The “Public-Private Investment Programme” will purchase the troubled mortgages and securities that have been at the root of the credit crunch.
The Treasury has committed $75bn to $100bn to the programme and said the private sector would also contribute…
To encourage private investors to take part in the scheme, low-interest loans and guarantees will be offered to private investors via the Federal Reserve and the Federal Deposit Insurance Corp – a government agency that backs bank deposits.
This means that the private investors, which the US hopes will include private equity, individual investors, pension plans and insurance companies, will shoulder relatively little risk, with 93% borne by the government.
- BBC News