Government to offer remarkably complex plan to buy toxic assets


It is hard to analyze whether the plan that the Treasury Department will announce next week to get toxic assets off bank books will work. It is astonishingly complex.

According toThe Wall Street Journal, "The federal government will announce as soon as Monday a three-pronged plan to rid the financial system of toxic assets, betting that investors will be attracted to the combination of discount prices and government assistance."

One of the key parts of the plan is that private investors including hedge funds are expected to buy some of the troubled assets. The government would put up a part of the money to take assets off bank balance sheets and guarantee the value of some of the assets if the risky paper falls sharply in value. The FDIC would offer many of these guarantees.