On Monday, Treasury Secretary Timothy Geithner, unveiled a plan to remove up to $1 trillion in bad loans from the bank’s books. The program aims to bring in private investors to buy up these assets with funding from the Federal Deposit Insurance Corp., a U.S. bank regulator as well as the Federal Reserve.
The Treasury Department reportedly will create a government body called the Public Investment Corporation. It is slated to finance the purchase of as much as $1 trillion in bad loans and toxic assets from ailing banks. The public-private partnership would be managed by private investors but financed with a combination of private money and capital from the government, which would share in any profit or loss. The price for the mortgages and other securities has not been determined yet.
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