The Wall Street Journal is reporting that the Public-Private Investment Partnership (PPIP), the U. S. government’s second attempt to sweep the “toxic assets” from the books of banks, is meeting with no more success than its predecessor plan:
The Legacy Loans Program, being crafted by the Federal Deposit Insurance Corp., is part of the $1 trillion Public Private Investment Program the Obama administration announced in March as a way to encourage banks to sell securities and loans weighing on their balance sheets to willing investors.
But prospective buyers and sellers have expressed reluctance to the FDIC about participating for fear the program’s rules will change in a political atmosphere hostile to Wall Street. In addition, some banks that might have sold troubled loans into the program earlier in the year have become less eager as they regained a sense of stability.
Clusterstock adds an additional interesting observation:
The whole program — which was just another giant subsidy to the banking system — was always riddled with controversy, and though there were always plenty of buyers eager to use government cash to lever up purchases of toxic assets, there has never been an eager seller.
Nobody wants to show a loss. Who’d a thunk it? You’d think that the good health of the banking system was less important to them than hanging on to their seven figure salaries!
