The scoop on toxic asset plans to be announced

March 21, 2009 | By Jim Kim

The rubber is meeting the road in the Obama Administration's efforts to end the financial crisis. According to the New York Times, the plans to be announced this week amount to a three-pronged action plan aimed at getting toxic assets off the books at big banks: First, the FDIC will set up partnerships to invest in assets, loaning (non-recourse) much of the money. Second, Treasury will hire up to five investment firms to manage assets, matching funds dollar for dollar. Third, the Treasury will expand the already underway TALF program.

The tricky issue of valuation has been settled: The plans call for an auction of securities to the highest bidder. All this is very ambitious, and to a large degree the perceived success of the administration hangs in the balance. It comes at a tough time, given the AIG bonus controversy. Stay tuned because the details will be important.

For more:
- here's the article