Firms Wary of Treasury's Stalled Toxic-Asset Bailout
As Treasury shifts gears from assets to equity stakes, firms shy away
By Clay Dillow,  Newser Staff
Posted Nov 7, 2008 10:22 AM CST
Treasury Secretary Henry M. Paulson Jr., speaks during a news conference, Friday, Oct. 10, 2008, in Washington.   (AP Photo/Manuel Balce Ceneta)
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(Newser) – A survey of more than 400 financial institutions found a large percentage are reluctant to participate in the $700 billion bailout program because of confusion, the Wall Street Journal reports. As Treasury hastily shifted gears from the original plan to buy toxic debt to taking equity positions in banks, more than nine in 10 firms said a “lack of clarity” has kept them from participating.

Financial firms prefer the original plan, which called for the Treasury to purchase troubled assets from banks to liberate cash, but so far the department hasn't even hired managers for the asset-purchase program. Nor has a pricing mechanism been determined. Firms also worry the remaining $400 billion isn’t enough to impact the trillions in bad assets out there.