Obama's Slush Fund

"The Obama administration insists it wants to 'partner' with private investors for its new toxic-asset purchase plan. But the more details that emerge, the more it seems Treasury wants to work with only a select few companies. This is no way to conduct a bank clean-up. The investment community was already suspicious last week when Secretary Timothy Geithner unveiled his plan, announcing that Treasury would select four or five companies as 'fund managers' to purchase toxic securities. Given that the whole idea is to create a liquid market for these assets, we'd have thought Treasury would encourage as many players as possible. ... Treasury rules also say the $10 billion limit must be comprised of commercial and residential mortgage-backed securities that as 'secured directly by the actual mortgage loans, leases or other assets and not other securities.' ... While dozens of banks and insurance companies today hold more that $10 billion in toxic securities, the vast majority are trying to get these assets off their books--not lining up to buy more. ... 'This is ugly,' says Joshua Rosner, ther managing director of Graham, Fisher & Co., an independent research firm. 'As long as they are experienced, there is no rational reason for creating limitations on who becomes a bidder and manager of assets. It doesn't serve the public good, though it may serve those few large firms that appear to have a privileged relationship with Treasury.' ... If this program is a roaring success, Treasury is guaranteeing that a select group of hand-picked firms are set to reap enormous profits, via a program that was largely underwritten by taxpayers", my emphasis, Editorial at the WSJ, 1 April 2009.

This is excellent. SecTreas Geithner can polish his resume while on the public payroll. Of course it is a "way to conduct a bank clean-up". The selected parties will do just that.