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December 2, 2008 11:45:21 AM CST

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Banks Scuttle SIV Bailout

Posted Dec 21, 07 3:56 PM CST in Business 

(Newser) – The three banks charged by Treasury with setting up a fund to bail out investments threatened by the subprime mess are abandoning the project, the Wall Street Journal reports. Citigroup, Bank of America and JP Morgan Chase had been working since September on the plan to rescue structured investment vehicles, but they have struggled to raise money for the project.

As recently as Tuesday, the banks were talking about the fund’s upcoming launch. Now they are expected to announce its official demise on Monday, although they could resurrect it if conditions worsen. Banks, especially Citigroup, have taken steps since the plan's inception to lessen its need, the Journal notes.

Source Wall Street Journal

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Graphic shows what a structured investment vehicle (SIV) is and how it works; 3c x 4 5/8 inches; 146 mm x 117.5 mm   (Associated Press)
The Citigroup office tower is seen in this April file photo.   (Getty Images)
Treasury Secretary Henry Paulson speaks before the Asia Society on U.S.-China economics, Wednesday, Dec. 5, 2007, in Washington. (AP Photo/Kevin Wolf)   (Associated Press)
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subprime mortgages • Citigroup • JPMorgan Chase • Bank of America


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