Choosing The Right Synthetic Super Senior "AAA" Rated Assets - 02/17/09

A recent piece from the Washington Post suggests Timothy Geithner is heavily considering a public-private partnership model to de-clog financial institutions weighed down by bad assets. Under this plan, private investors would bid for assets and receive backing from the government if needed. We're still waiting on the actual specifics of the plan, but according to the Washington Post:

By Wednesday, Feb. 4, Geithner was leaning toward a different approach that his former colleagues at the Federal Reserve had developed months earlier, the source said. This involved a joint public-private fund to buy up the assets. Private investors, likely hedge funds and private-equity funds, would put up capital, and the government would loan money to the fund. If the private investors made wise decisions about which assets they bought, they would be able to pay back the government and make money for themselves.

Coming off an horrific six months, it appears those who remain standing will be tasked with saving the world economy. This is a lot like Indiana Jones braving legions of Nazis, avoiding decapitation and then having to chose from a room of chalices the one grail that will save his father. For those funds and individuals with the balance sheets to undertake this venture, eternal glory awaits their wise choices.

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