3 more investment firms approved for asset program

Hogs gathering at the tax payer money trough - courtesy Bernanke + Geithner

Three more large investment firms have raised sufficient capital to participate in the joint partnership with the government to purchase toxic assets from banks.

The Treasury Department said Alliance Bernstein LP and BlackRock Inc., both headquartered in New York City, and Wellington Management Co., based in Boston, had all raised the $500 million minimum to begin operations.

Those three firms join the first two to clear all the hurdles for participation last Wednesday, Invesco Ltd. and the TCW Group Inc.

The goal of the program is to rid banks of bad loans so they can resume more normal lending, which is key for sustaining any economic recovery.

With the three new additions, the total purchasing power to obtain banks' soured assets has increased to $12.27 billion, Treasury said.



Excerpt: AP News Story Via Yahoo News - http://news.yahoo.com/s/ap/20091005/ap_on_go_ca_st_pe/us_toxic_assets


Question: So each of these companies has raised about 500 million dollars or so but the total purchasing power is reported at $12.27 billion dollars?

==> To rid banks of toxic loans, they are going to leverage the capital raised by these firms by ~ 500%, which when all is said and done would perhaps leave the tax payers as the ultimate losers at the rate of 5 : 1

PPIP is a 93% taxpayer-subsidized program with the taxpayer in the first-loss position. Those companies are putting up 7% of the purchase price and are getting the senior position in the deals, as well.

A little quick math: 12.27B * 100/7 is about $175B of our money that you can count on ending up as a near-total loss. (This works out to a little over 14:1 leverage by the way.)

This is organized looting of the Treasury and it should never be permitted to come to pass.