The Treasury Department approved another investment group to participate in a public-private partnership with the government to buy risky housing-related securities.
Angelo, Gordon & Co. L.P. and GE Capital Real Estate will invest in the Treasury's Public-Private Investment Program, the department announced. It did not specify the size of the investment.
Under the program, the Treasury guarantees loans used to purchase the assets, which include the mortgage-based derivatives many believe contributed to last year's financial crisis.
Creating a market for these assets has been a primary goal for the Treasury since the credit markets froze up. By backing loans used to buy them, the government hopes to move them off the books of traditional banks and free them up to resume normal lending activity.
Nevertheless, the PPIP program has come under fire as demand for the securities has improved since last year's the financial meltdown. Some critics have questioned whether the assistance amounts to a giveaway to the financial industry.
To date, six investment groups have completed initial closings on approximately $3.58 billion of private sector equity capital, which Treasury has matched, representing $7.17 billion of total equity capital. Treasury has also provided $7.17 billion of debt capital, representing $14.34 billion of total purchasing power, the department said.
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