Individual citizens should be allowed to invest in the Public-Private Investment Program, which is aimed at removing toxic assets from the balance sheets of financial institutions, according to the chairman of the House Subcommittee on Capital Markets.
“While I was pleased to see you announce the Public-Private Investment Program to remove toxic assets from the balance sheets of financial institutions, I believe that average Americans of modest means should also be allowed to buy shares or have some means of buying into the program,” Rep. Paul Kanjorski, D-Pa., wrote in an April 2
letter to Treasury Secretary Timothy Geithner.
“By making this adjustment, you would be addressing concerns that this latest administration program too much resembles a rigged game for a select few insiders,” wrote Mr. Kanjorski, whose committee is part of the House Financial Services Committee.
He continued that that the program “fails to provide average Americans a tangible means of voluntary participation. Simply stating that taxpayers will share in the upside does not vest individual Americans with a sufficient degree of involvement,” Mr. Kanjorski wrote.
Despite his recommendation that citizens be allowed to participate, he expressed reservations about the program as it currently stands.
“Rather than providing a transparent method for public-private cooperation, the plan seems opaque and geared toward rewarding some of the very institutions whose recklessness and greed precipitated and exacerbated the ongoing financial crisis,” Mr. Kanjorski wrote.
“The American people will rightly question the method by which Public-Private Investment Program participants were selected to have the opportunity to gain what we all hope will be substantial profits.”
The Department of the Treasury did not return calls for comment.
The PPIP was announced by the Treasury on March 23 as part of the government’s effort to repair balance sheets throughout the financial system and ensure that credit is available.
Under the program, the Treasury, the Federal Deposit Insurance Corp. and the Federal Reserve will use $75 billion to $100 billion in capital from the Troubled Asset Relief Program, as well as capital from private investors, to generate $500 billion to $1 trillion in purchasing power to buy “legacy assets,” or troubled assets, from financial institutions.
A goal of the program is to reduce the price that the government will pay for the assets since private investors would compete with one another to establish a market price for the loans and securities purchased under the program, thus driving down the prices of the assets.
