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PPIP is a pipsqueak


The Treasury Department is finally out with its final version of a plan for ridding the banks of toxic assets and you have wonder why the Obama administration even bothered.

Treasury will now fund the program with $30 billion in government money. Back in March, Treasury Secretary Tim Geithner was talking about kicking in between $75 billion and $100 billion into the program.

The reduced government commitment is a sign that Treasury couldn’t convince banks to go along with the idea of selling their toxic securities at a discount–something that would force another round of painful writedowns.

So the toxic assets, for the most part, will continue to sit on the balance sheets of the banks and we’ll continue to delude ourselves that the financial system is on the road to recovery.