Hoffman Meyer CEO says “Treasury's Toxic Asset Plan Could Cost $1 trillion.

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) March 23, 2009 -- The Obama administration's latest attempt to tackle the banking crisis and get loans flowing to families and businesses will create a new government entity, the Public-Private Investment Program, to help purchase as much as $1 trillion in toxic assets on banks' books.

The new effort, to be unveiled Monday, will be followed the next day with release of the administration's broad framework for overhauling the financial system to ensure that the current crisis, the worst in seven decades, is not repeated.

A key part of that regulatory framework will give the government new resolution authority to take over troubled institutions that would pose a threat to the entire financial system if they failed.

Administration officials believe this new power will save taxpayers money and avoid the type of controversy that erupted last week when insurance giant American International Group paid employees of its troubled financial products unit $165 million in bonuses even though the company had received more than $170 billion in support from the federal government.

Under the new powers being sought by the administration, the treasury secretary could only seize a firm with the agreement of the president and the Federal Reserve.

Once in the equivalent of a conservatorship, the treasury secretary would have the power to limit payments to creditors and to break contracts governing executive compensation, a power that was lacking in the AIG case.

The plan on toxic assets will use the resources of the $700 billion bank bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp.

The initiative will seek to entice private investors, including big hedge funds, to participate by offering billions of dollars in low-interest loans to finance the purchases. The government will share the risks if the assets fall further in price.

When Treasury Secretary Timothy Geithner released the initial outlines of the administration's overhaul of the bank rescue program on Feb. 10, the markets took a nosedive. The Dow Jones industrial average plunged by 380 points as investors expressed disappointment about a lack of details.

Douglas Morgan, CEO at Hoffman Meyer Associates in Seattle said “It's important for investors to know that the administration is bringing a full array of programs to confront the problem.”

The Hoffman Meyer Associates CEO went on further to say "I don't think Wall Street is expecting the silver bullet and this is one more piece. It's a crucial piece to get these toxic assets off, but it is just part of it and there will be more to come." Morgan finished by saying "This is a start and we will see how far it goes, but I believe they will have to go back to Congress for more money."
Hoffman Meyer Associates is Seattle's leading merger and acquisition, business brokerage firm. As a mergers & acquisition firm, our principals have completed scores of transactions of privately and publicly held companies during the past 25 years.

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