Reply #41: U.S. to Invite The Wealthy To Invest in The Bailout

[slipslidingaway]

This should be interesting to watch, thanks for noticing the second article.

:)

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/05/AR2009030503762.html


"The initiative to revive the consumer lending business, outlined by officials this week, offers these wealthy investors a new chance to make sizable profits -- but, thanks to the government, without the risk of massive losses.

The idea is to entice them to put their huge cash piles to work to stimulate the financial system. They would be invited to buy up recently issued, highly rated securities. These securities finance consumer lending, such as credit cards and student and auto loans.

The program, which could involve the government lending nearly $1 trillion to these investors, exceeds the size of every other federal effort to address the crisis so far. The initiative's approach could be the model for future federal efforts to aid the credit markets, sources familiar with government planning said. Officials call this strategy a "public-private partnership," but in essence the government is offering good deals to private investors to draw them into its rescue efforts...

The Treasury Department and Federal Reserve will continue to lean on these private investors as officials expand their aid to more segments of the lending markets each month, moving from consumer credit possibly on to commercial mortgages and financial derivatives, the sources said. But there is vigorous debate between the Treasury and the Fed and within them over how the program should evolve and at what speed.

This approach will culminate in a separate program that aims to relieve banks of toxic assets, backed by distressed loans, that are clogging the firms' balance sheets, sources said. This second initiative, which officials are hoping to unveil in the coming weeks, is also expected to reach at least $1 trillion. It may create multiple investment funds, financed by wealthy investors with matching dollars from the Treasury and loans from the Fed, to buy toxic assets, sources said..."