Treasury Secretary Timothy Geithner said today the federal government is planning to roll out a new program that will provide government financing and use private asset managers to acquire toxic assets from troubled financial institutions.
Details of the proposed public/private investment fund which he said could provide up to $1 trillion of financing are still under development, Mr. Geithner said in a long-anticipated speech outlining the Obama administrations plans for financial bailouts.
By providing the financing the private markets cannot now provide, this will help start a market for the real estate-related assets that are now at the center of this crisis, Mr. Geithner said.
Mr. Geithner also said the objective of the new proposed public/private investment fund was to use private capital and private asset managers to help provide a market mechanism for valuing the troubled 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, Mr. Geithner said. We believe this program should ultimately provide up to $1 trillion in financing capacity, but we plan to start it on a scale of $500 billion, and expand it based on what works.