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Treasury May Require Matching Funds for Bailouts

Setting matching funds as a prerequisite for rescue cash puts investors back in the picture
By Jim O'Neill,  Newser Staff
Posted Nov 12, 2008 8:39 AM CST
Treasury May Require Matching Funds for Bailouts
Assistant Treasury Secretary Neel Kashkari speaks about the implementation of the Troubled Asset Relief Program at a conference Monday, Nov. 10, 2008 in New York.   (AP Photo/Mark Lennihan)

(Newser) – Companies that take part in the second phase of the Treasury Department’s bailout plan could be required to raise private capital to match federal funds, reports the Wall Street Journal. The first phase of the Troubled Asset Relief Program, which has been buying up stakes in banks, has no such requirements—and has just $60 billion left before Treasury has to go back to Congress to unlock the second half of the $700 billion approved.

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Treasury hopes to expand the fund—which already has committed $250 billion to large banks and some $40 billion more to insurer AIG—to smaller banks, insurers, and related financial companies. It’s also being pressed to aid the auto industry. Requiring matching funds reduces the perception that the government is picking winners and losers as well, experts say.
(Read more financial crisis stories.)

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