Washington names nine to buy toxic assets

Nine companies will be able to buy toxic assets from the US authorities' legacy asset programme it emerged on Wednesday.

The Treasury also said it would invest $30 billion in equity and debt in the public-private investment programme, under which the authorities will match private capital dollar-for-dollar.

The nine fund managers are:
• AllianceBernstein, and its sub-advisors Greenfield Partners and Rialto Capital Management;
• Angelo, Gordon & Co., and GE Capital Real Estate;
• BlackRock;
• Invesco;
• Marathon Asset Management;
• Oaktree Capital Management;
• RLJ Western Asset Management;
• The TCW Group; and
• Wellington Management Company.

Pimco was expected to be one of those named but said that it had withdrew its bid last month because of uncertainties regarding the scheme's design.

Initially, the Treasury said it would work with up to five as-yet unchosen fund managers which met the following criteria:
• demonstrated capacity to raise at least $500m of private capital;
• demonstrated experience investing in eligible assets, including through performance track records;
• a minimum of $10 billion (market value) of eligible assets under management;
• demonstrated operational capacity to manage legacy securities public-private investment funds in a manner consistent with Treasury's stated investment objective while also protecting taxpayers; and
• headquarters in the United States.

However, the authorities signalled on Wednesday that not all of the nine had met the five criteria, saying: "To ensure robust participation by both small and large firms, these criteria were evaluated on a holistic basis and failure to meet any one criterion did not necessarily disqualify an application." Each of the nine now has 12 weeks to raise $500m.

On the back of Congressional pressure, the authorities also ensured that the nine chosen established "meaningful partnership roles" with small-, veteran-, minority-, and women-owned businesses. "These roles include, among others, asset management, capital raising, broker-dealer, investment sourcing, research, advisory, cash management and fund administration services," the authorities said.

The businesses chosen were:
• Advent Capital Management;
• Altura Capital Group;
• Arctic Slope Regional Corporation;
• Atlanta Life Financial Group, through its subsidiary Jackson Securities;
• Blaylock Robert Van.;
• CastleOak Securities;
• Muriel Siebert & Co;
• Park Madison Partners;
• The Williams Capital Group; and
• Utendahl Capital Management.

When announced in March, the public-private plan garnered a positive response from market participants but was more coolly received by economists.

It was seen as an integral part of any financial-sector recovery and a benchmark by which to judge Tim Geithner's performance as Treasury secretary.

"Our approach shares risk with the private sector, efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets," Geithner said at the time. "Simply hoping for banks to work these assets off over time risks prolonging the crisis in a repeat of the Japanese experience."

Click here to read the authorities' statement