Now that Geithner’s PPIP toxic-asset purchase plan has been blasted as a massive giveaway to participating banks and huge wealthy Wall Street investment firms, the Treasury has modified the plan.
Now it will also be a giveaway to smaller, less wealthy investment firms owned by people who aren’t Caucasian males:
WSJ: [T]he Treasury Department… said it may allow a broader group of private investors to purchase toxic securities.
Last month, the Treasury said it would select fund managers based on certain criteria, including an ability to raise private capital and a minimum of $10 billion of eligible assets under management.
On Monday, the Treasury said a proposal won’t necessarily be disqualified if firms don’t meet all the criteria. The Treasury added that it is particularly interested in program participation by small, minority- or woman-owned businesses.
The Treasury obviously has two other objectives here:
- Reduce the risk that the Big 5 investors–PIMCO, Blackrock, etc.–will be pilloried for ripping off the taxpayer when the taxpayer finally wakes up and understands how badly the taxpayer is getting ripped off. (The more firms involved, the more diffused the blame will be).
- And, thus, encourage more investors to participate. Apparently there wasn’t enough demand, perhaps for the same reasons Bridgewater isn’t participating–the legal and reputational risk.