Treasury picks asset management firms for bailout
WASHINGTON — The Treasury Department on Wednesday selected three management firms to handle bank assets obtained as part of the $700 billion financial rescue program.
The assets include stock warrants that Treasury has received as part of its program to buy nearly $200 billion in preferred shares in banks to help bolster their capital reserves and resume more normal lending to consumers and businesses.
The firms selected — which came from a pool of applicants that had over $2 billion in assets under management — were: New York City-based AllianceBernstein LP; FSI Group LLC, based in Cincinnati, Ohio; and Piedmont Investment Advisors LLC of Durham, N.C.
The banking industry is lobbying the Treasury Department to make it less costly for banks to get out of the Capital Purchase Program. The banks want to eliminate a requirement that the government be paid for warrants it received that include the right to purchase bank shares in the future.
Treasury Secretary Timothy Geithner said Wednesday the administration would welcome moves by strong banks to repay the bailout funds. He said the repayments would have to meet Treasury’s desire to ensure “that the system as a whole is not working against a recovery” by depriving banks of the resources they need to support increased lending.
A Treasury spokesman had no immediate comment about what payments banks should be required to make for stock warrants the government holds.
The asset managers selected Wednesday cover only the government’s purchase of preferred stock. Under another planned program, the government is looking for asset managers to handle the purchase of toxic securities held by banks.
So far, seven banks have returned the money the government paid for their stock. One bank, Centra Financial Holdings Inc. of Morgantown, W.Va., has given the government $750,000 to buy back stock warrants that Treasury was holding.
Some large banks also have expressed interest in repaying the billions of dollars in government support they have received. But they have not indicated a desire to exit from other government support programs, such as temporary loan guarantee initiatives being operated by the Federal Deposit Insurance Corp.
On another bailout issue, Treasury said Wednesday it selected two more mortgage companies to participate in a program to mitigate mortgage foreclosures. The companies were Wilshire Credit Corp. of Beaverton, Ore., which qualified for up to $366 million in incentives, and Home Loan Services Inc. of Pittsburgh, authorized for up to $319 million.
The government now has named 11 companies to participate in the program, which is designed to encourage mortgage companies to lower borrowers’ monthly bills. The ultimate price tag may reach $75 billion and total incentives awarded so far are $13.9 billion.
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