The wheels can sometimes grind slowly at the Treasury Department, and never more so than in getting the program up and running for relieving banks’ balance sheets of mortgage-backed securities and other undesirables.

When Congress approved the previous administration’s plans for a Troubled Asset Relief Program last fall as part of its $700 billion bank bailout, it was supposed to help the banks find a way to dump their hard-to-value assets and create a kind of price discovery mechanism out of thin air. Former Treasury Secretary Henry Paulson soon decided that the plan would take too long to get up and running, so the TARP funds mainly went toward multibillion-dollar capital injections into some of the biggest banks in the country to prop them up or help steer them into the arms of others.

It fell to Paulson’s successor, Timothy Geithner, to come up with a way to actually deal with all those troubled assets the banks didn’t want to simply write off their books. Investors clamored for the plan almost as soon as Geithner arrived in office and many initially panned his vague description in February of a Public-Private Investment Partnership to buy up the assets. Once Geithner and his team produced a more-detailed plan in March, though, investors began to take it more seriously, and now the somewhat juvenile-sounding PPIP is finally underway.

The Treasury Department announced Monday that it has closed three Public-Private Investment Funds on top of initial funds announced last week. Private investors, including AllianceBernstein and its advisors Greenfield Partners and Rialto Capital Management, have raised $1.94 billion, which the Treasury matched with $1.94 billion in equity capital and $3.87 billion in debt financing. BlackRock and Wellington Management have also raised at least $500 million of equity capital from private investors. Investors such as pension funds have been buying in.

Last week, the Treasury announced that Invesco and the TCW Group had collectively raised about $1.13 billion, which the Treasury also matched with equity and debt financing. Altogether, the funds will have $12.27 billion in purchasing power, and more funds are expected to be approved throughout this month. Up to $30 billion has been committed to the PPIP.

The buying will begin next week, presumably. But that will still leave the question of how to value those toxic assets. While the Treasury made money off some of the TARP investments that several banks have already repaid in hopes of escaping the onerous salary caps, the Treasury is not likely to recoup many of the funds, especially those that went to still-distressed companies like AIG.

The Treasury’s accounting has led to a great deal of skepticism. In his most recent report on the TARP, special inspector general Neil Barofsky said the Treasury misled the public last fall about the health of some of the banks that were given billions in taxpayer money.

The bailout formula was supposed to be pegged to 3 percent of their risk-weighted assets, up to $25 billion each, according to The New York Times. But some of the banks that were expected to merge with others received their bride-to-be’s dowry as well, as in the case of Bank of America and Merrill Lynch, and Wells Fargo and Wachovia.

The prospects for the Treasury and its private partners in getting an active market going again for risky assets like mortgage-backed securities is questionable right now, although the recent activity on the stock market shows that some investors who still have money left are once again all too willing to take enormous risks with it. The fact that the Treasury has attracted billions of dollars to the program from private investors is a good sign, but with all the extra inducements and backstopping it’s providing to its partners, the Treasury could find itself even further in the red when all is said and spent.

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