New Geithner Plan to Buy Up a Trillion in Toxic Assets

NyPo reports that Treasury Secretary Timothy Geithner is about to announce a plan to take a trillion dollars worth of toxic debt off the books of banks.

According to NyPo, the plan includes:

...the creation of an entity backed by the Federal Deposit Insurance Corp. that would purchase the junk paper that has caused banks fits. The FDIC would finance a portion of these purchases, which could be done through investment partnerships.

A second plan entails expanding a Federal Reserve asset-buying plan to include assets originated as far back as 2005. The plan in question, the Troubled Asset-Backed Securities Loan Facility, or TALF, now only covers newly created securities.

The third plan would establish through the Treasury public-private investment funds that would buy up mortgage-backed securities and other bonds and would be run by private investment managers. Both Uncle Sam and the private firms would enjoy the benefits of any profits, but also would be on the hook for any losses.

Central to Geithner's plan is the need to attract private firms to participate in the buying of the toxic assets...

Of course, just why a private firm would want to get involved in one of these P3's is the key question. The answer, as always, is green. Through the cover of removing toxic assets from banks, Geithner has come up with a new mad caper that Carlyle Group, and the like, are going to sign up for only if Geithner is shoveling major league $$$ at them. After all, Carlyle does have expenses.