The U.S. Treasury Department announced on Tuesday that two more large investment companies have fulfilled the necessary requirements and are ready to join the federal government’s toxic assets purchase program.
The federal government initiated buying toxic assets from banks with the intention of helping them resume normal lending, which will fuel economic recovery.
The two investment companies, which together raised more than the $500 million needed to close investment funds, were New York-based Angelo, Gordon & Co. LP and Norwalk, Conn.-based GE Capital Real Estate. These companies will jointly invest in the Public-Private Investment Program (PPIP), under which the Treasury provides financial support for private firms that buy distressed assets, including mortgage-related loans.
These two companies take the total number of firms to have joined the government in buying toxic assets to six. The private sector capital raised by these six firms totaled $3.58 billion. With the Treasury’s additional investment capital, the total amount available for buying bad bank assets stands at $14.34 billion. Invesco Ltd. (IVZ) and TCW Group Inc. have already agreed to invest in PPIP.
In March 2009, the Treasury initially announced that the program would buy as much as $1 trillion worth of toxic assets. However, amid improvements in the economy, the program has been scaled back several times.
However, the Treasury has remained optimistic and now expects PPIP to be a $40 billion program. It expects three more firms to participate in the program soon.
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