Toxic Asset Disposition Plan

To expedite the removal of troubled “legacy” loans and securities from books of U.S. financial institutions, the U.S. Treasury Department (the Treasury) announced on March 23 the next in a series of initiatives designed to address the financial crisis—the Public Private Investment Program, or PPIP. The administration believes that these legacy loans and securities have created uncertainty around the balance sheets of financial institutions, compromising their ability to raise capital and their willingness to lend. The PPIP has two parts, one addressing legacy loans on the books of FDIC-insured banks, the other aimed at securities held by banks, insurance companies, pension funds, mutual funds, and funds held in individual retirement accounts. The PPIP has attracted a good deal of early interest, with approximately 2,700 parties participating in a conference call hosted by the FDIC last week, according to the American Banker.

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