So much hype over the plan to let private investors underpay for toxic assets, and in the end, there’s still no solution.
Second, alongside this new Financial Stability Trust, together with the Fed, the FDIC, and the private sector, we will establish a Public-Private Investment Fund. This program will provide government capital and government financing to help leverage private capital to help get private markets working again. This fund will be targeted to the legacy loans and assets that are now burdening many financial institutions.
By providing the financing the private markets cannot now provide, this will help start a market for the real estate related assets that are at the centre of this crisis. Our objective is to use private capital and private asset managers to help provide a market mechanism for valuing the assets.
We are exploring a range of different structures for this program, and will seek input from market participants and the public as we design it.
Awesome, they’re exploring a range of different structures, read: they have no idea how they’re going to create a so-called “market price” at some price that’s not the current “market price”. Perhaps they’re running into the same problem Hank Paulson ran into.
No wonder stocks are tanking.