The Treasury also said it will consider opening the program to smaller firms once the initial process is completed. Currently, fund managers must have $10 billion of commercial and residential mortgage-backed assets under management and be able to raise at least $500 million of private capital.
Today’s guidelines apply to the department’s program for illiquid securities. Treasury Secretary Timothy Geithner last month proposed the effort, which seeks to spur investors to buy, and banks to sell, the toxic real-estate assets clogging banks’ books. The program, along with another plan for buying whole loans, is expected to use up to $100 billion of the Treasury’s bank bailout funds. The securities partnerships can also obtain financing from the Federal Reserve’s Term Asset-Backed Securities Loan Facility.
While the public-private partnerships are limited to buying non-agency commercial and residential mortgage-backed securities issued prior to 2009 and originally rated AAA, the Treasury said it will solicit comment from fund managers to possibly expand the program to other asset classes.
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