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A Big Surprise: Troubled Assets Garner Rewards
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Aug 26, 2010 10:46pm |
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| Category | News |
| Media | Newspaper - New York Times |
| News Date | Friday, August 27, 2010 04:45:00 AM UTC0:0 |
| Description | By ERIC DASH
Published: August 26, 2010
American taxpayers are already poised to make unexpected billions from rescuing the nation’s banks. Now, they could reap another sizable profit from a government program devised to purge troubled real estate assets from the financial system.
The Obama administration made the so-called Public-Private Investment Program a centerpiece of its plan to help unlock the frozen credit markets in the spring of 2009, when a lack of buyers for complex mortgage securities threatened the health of the nation’s banks and put a drag on lending.
Under the program, the government provided matching funds and ultracheap loans to investment firms like AllianceBernstein and Oaktree Capital that agreed to buy mortgage securities from banks, insurers and other financial institutions.
Taxpayers stood to share in any of the profits, though the prospects of such a windfall were seen as secondary to the goal of unclogging the markets.
Nine months into the program, the eight investment funds chosen by the Treasury Department have generated an estimated return of about 15.5 percent for taxpayers, according to an analysis of their results through the end of June by Linus Wilson, an assistant professor of finance at the University of Louisiana, Lafayette.
Two of the investment funds — one operated by an Angelo Gordon-GE Capital consortium and another by BlackRock — have gotten off to even stronger starts, posting returns of more than 20 percent.
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