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New Bailout Plan Hinges on Private Investors

Treasury will set 'floor price' on distressed assets to lure buyers

By Kevin Spak, Newser Staff

Posted Feb 9, 2009 8:37 AM CST

(Newser) – The Treasury's latest plan to rescue the banking industry relies heavily on private-sector investors, the New York Times reports. The government will guarantee a floor price on the toxic assets weighing down banks’ balance sheets, encouraging hedge funds, private equity groups, and even insurers to buy them. The plan should reduce the need for federal fundraising and mitigate the risk to taxpayers.

The process will probably need to be highly transparent, said one economist, because “Congress is really hypersensitive to this issue. Believing you can get away with the opaque deals we saw in Citigroup or Bank of America would be a misconception.” Treasury Secretary Timothy Geithner will likely request the remainder of the TARP funds for his plan, which would also inject more capital into banks and attempt to slow foreclosures.

Treasury Secretary Timothy Geithner, right, convenes his first meeting as chairman of the President's Working Group on Financial Markets, Feb. 5, 2009, at the Treasury Department. (AP Photo/Gerald Herbert)

President Barack Obama listens to Treasury Secretary Timothy Geithner as he delivers remarks about executive compensation, Wednesday, Feb. 4, 2009, in the Grand Foyer of the White House. (AP Photo/Ron Edmonds)

Treasury Secretary Timothy Geithner listens as President Barack Obama speaks about executive compensation Feb. 4, 2009, in the Grand Foyer of the White House. (AP Photo/Charles Dharapak)

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New Bailout Plan Hinges on Private Investors

Treasury will set 'floor price' on distressed assets to lure buyers

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Geithner: Obama Won't Ask Me to Stay

Treasury secretary says he's done after election

Taxpayers Still Have $132.9B Stuck in TARP

Government trying to unwind stock without losing on the deal

Geithner Considering Leaving Post at Treasury

He may go after deal on debt ceiling, say reports

98 TARP-Funded Banks Risk Failure

Smaller banks under stress, finds WSJ analysis

Taxpayers Will Score $12B on Citigroup Bailout: Treasury

Government strikes deal to sell remaining 2.4B shares

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New Bailout Plan Hinges on Private Investors

Treasury will set 'floor price' on distressed assets to lure buyers

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OTHER STORIES ON OUR RADAR

Treasury Department • financial sector • collateralized debt obligations • Obama administration • banking industry • Troubled Asset Relief Program • financial crisis • Wall Street bailout • Timothy Geithner • TARP • toxic assets • foreclosures

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

Geithner: Obama Won't Ask Me to Stay

Treasury secretary says he's done after election

Taxpayers Still Have $132.9B Stuck in TARP

Government trying to unwind stock without losing on the deal

Geithner Considering Leaving Post at Treasury

He may go after deal on debt ceiling, say reports

98 TARP-Funded Banks Risk Failure

Smaller banks under stress, finds WSJ analysis

Taxpayers Will Score $12B on Citigroup Bailout: Treasury

Government strikes deal to sell remaining 2.4B shares

About Us

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Newser By Users

Community

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What is Newser?