The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

US treasury plan: Geithner’s plan lacks legs

Timothy Geithner’s proposals for hedge funds and private equity funds to buy the mortgage-backed assets that clog financial institutions’ books have not been met with the enthusiasm the US government might have wished for.

In February, the Treasury secretary said: "By providing the financing that the private markets cannot now provide, this will help start a market for the real estate-related assets that are at the centre of this crisis. Our objective is to use private capital and private asset managers to help provide a market mechanism for valuing the assets."

Industry participants are somewhat bemused by the vague plan. David Beim, a professor at Columbia Business School, says: "It sounds like Geithner intends to set up a new entity with joint ownership of government and the private sector to buy up these bad assets but I’m not sure why private investors would want to buy into that. The goal seems to be a government purpose and not a profit-seeking purpose and that is unlikely to attract interest. It would be better to let the private sector own the assets and support that ownership with insurance or leverage. Without that support it will be hard to get investors to commit."

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree