Banks, Investors to Hear Toxic Asset Plan

Banks looking to shed bad assets and investors interested in buying them will gain additional details on Thursday regarding the Obama administration's plan to kickstart the market for toxic debt.

Two industry groups, the Securities Industry and Financial Markets Association (SIFMA) and the Pension Real Estate Association (PREA) are hosting a summit to discuss the structure and potential impact of the government's Public-Private Investment Program (PPIP), which is set to begin operating this month. Officials from the Federal Reserve, Treasury Department and Federal Deposit Insurance Corp. will be on hand as featured speakers, and will likely address two key issues that have so far hamstrung the endeavor: Pricing and public scrutiny.

The PPIP has gained little traction since it was announced with great fanfare over two months ago, calling into question how much success it will ultimately have. One pitfall pertains to a lack of confidence that the government won't spontaneously change the rules of the game to mollify populist rage.

Potential investors have witnessed punishment levied against firms receiving government support in the form of compensation limits, strict oversight and fiery questioning at congressional hearings, with American International Group (AIG) being the most prominent example. Banks have also faced a slew of restrictions that were added after accepting funds from the Troubled Asset Relief Program, money that some firms claim they didn't need in the first place.

The retroactive provisions and public scrutiny has made banks eager to repay those dollars as soon as possible. JPMorgan Chase (JPM), Goldman Sachs (GS), American Express (AXP), BB&T (BBT) and Northern Trust (NTRS) have already applied to do so, and Morgan Stanley (MS), Wells Fargo (WFC), Bank of America (BAC), and others have expressed interest in doing so as well.