Have you downloaded the form yet to apply for the public-private partnership? The Treasury is offering great terms, you may have heard.
Well, it’s probably just as well that you haven’t. You probably won’t be eligible. The entry requirements pretty much rule out all but the biggest and most well-connected. It’s not just that you have to have $10 billion in assets under management — a lot of funds have that — but you have to be managing at least $10 billion of a specific asset type.
As WSJ notes, several big firms won’t be eligible:
Hedge Fund Intelligence recently estimated total assets under management at Avenue Capital Group at $16.4 billion, King Street Capital at $15.8 billion, Fortress Investment Group at $13.7 billion, and Elliott Associates at $12.8 billion. Presumably, the portion of these portfolios devoted to toxic assets is significantly smaller. “It’s difficult to imagine why most firms would even bother to apply now,” one hedge fund manager told us.
What’s this mean for the future of the plan? You guessed it. Another payout for a few preferred players.
The new details simply suggest that Geithner wants to avoid a bidding war between “PIMROCK” and other hedge funds. This clearly helps “PIMROCK”.
Ironically, this helps taxpayers too as the smaller number of bidders, the less taxpayer risk there is.
The Big Boy’s Club
Remember that banks can refuse the bids. And remember that the big boys involved are all aligned in one goal: To dump $500 billion of toxic assets on to unsuspecting taxpayers to bailout both the banks and the bondholders.
The whole scheme is not really a bidding process at all but rather backroom political dealing by the “Good Ole Boys” on how to split the pie.