Geithner Plan letting the big get bigger

[da loser]

http://online.wsj.com/article/SB123854120033275659.html

But the bigger shock was when Treasury released its application to become a fund manager, a main rule of which is that only firms that already have a minimum of $10 billion in toxic securities under management can apply. Few hedge funds, private equity players or sovereign wealth funds come near this number

As for asset management firms that hold such a big portfolio -- and are also healthy enough to serve as fund managers -- there is only a small pool, such as Black Rock, Pimco, Goldman Sachs or Legg Mason, as well as a titan or two of the hedge fund industry, such as Bridgewater.

If this program is a roaring success, Treasury is guaranteeing that a select group of hand-picked firms are set to reap enormous profits, via a program that was largely underwritten by taxpayers. As it is, smaller players can now only take part in this program if they agree to "buy" into the funds run by one of the exclusive managers. So not only is the government going to be anointing a favored few to invest in these assets. It is also giving those favored few the opportunity to collect fees and profit-sharing from anyone else that wants to go in with them.

so the big firms will get bigger. they'll get first crack, then sell off to bit players for fees.

great idea!

 

[theeedude]

It's not just that the big will get bigger. It's also that the reckless will get bigger at the expense of the prudent.

 

[JS80]

the PPIP is going to be a massive failure

edit: but this is a smart move. anyone managing under $10 bil probably doesn't' have resources to manage them. these securities are complex and requires a lot of IT infrastructure and services.