US picks 9 firms for toxic debt program debt program

The Barack Obama administration selected nine financial companies to manage a scaled-down program aimed at helping troubled American banks clean up their strained balance sheets and said it would invest up to US$30bn to get it started. The program is designed to take up to US$40bn in so-called toxic commercial and residential mortgage securities and other assets off bank balance sheets so that they can provide new sources of lending to the world's largest economy. Among those selected to serve as asset managers of the Public-Private Investment Program were BlackRock, AllianceBernstein, Oaktree Capital Management, Invesco, Angelo, Gordon & Co., Marathon Asset Management, RLJ Western Asset Management, The TCW Group and Wellington Management Co.

The Treasury chose the nine investors from a group of 100 potential participants agency officials considered last month. The firms will have 12 weeks to raise US$500mn of capital each from private investors willing to invest in toxic securities held on banks' books. However, they must take at least four weeks to raise the funds. Those investments will be matched by the Treasury and supplemented with debt financing from the agency. The private investors must also invest at least US$20mn of firm capital into the program, known as the Legacy Securities Program.

In addition, 10 women- and minority-owned asset management firms were chosen to serve as partners. The Treasury will match up to US$10bn in equity put up by the private investors along with as much as US$20bn in debt financing. This is significantly less th