Bailout Hits Hiring Hurdles Over Fees, Vetting
Low fees for managers and lack of Treasury manpower put brakes on bailout
By Clay Dillow,  Newser Staff
Posted Oct 28, 2008 8:34 AM CDT
Treasury Secretary Henry Paulson speaks during a news conference at the Treasury Department in Washington, Monday, Oct. 20, 2008.   (AP Photo/Gerald Herbert)
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(Newser) – Though the $700 billion bailout deal won approval Oct. 3, the Treasury has yet to begin purchasing bad loans that are poisoning the credit pool, due to delays in hiring financial firms to oversee the program, the Wall Street Journal reports. Concern over the fees that will be paid to managers, laborious vetting to avoid conflicts of interests, and a lack of manpower at the Treasury have hamstrung the process, feeding investor uncertainty.

The fees paid to managers—who will decide what to buy, when to buy, and how long to hold assets—will be less than the usual 0.35% of assets paid to private fund managers, leaving the Treasury to figure out how to attract managers without overpaying. Meanwhile, manpower has been diverted to Treasury's more recent initiative, taking equity stakes in banks to bolster confidence.