Exclusively Rescuing the Selective

According to this article in the WSJ, Treasury’s Very Private Asset Fund,, Geithner is only going to work with a select few private investors as part of his Pippy Longstockings Plan.

The investment community was already suspicious last week when Secretary Timothy Geithner unveiled his plan, announcing that Treasury would select four or five companies as “fund managers” to purchase toxic securities. Given that the whole idea is to create a liquid market for these assets, we’d have thought Treasury would encourage as many players as possible.

But the bigger shock was when Treasury released its application to become a fund manager, a main rule of which is that only firms that already have a minimum of $10 billion in toxic securities under management can apply. Few hedge funds, private equity players or sovereign wealth funds come near this number. The hurdle would bar many who specialize in the very distressed assets that the Obama Administration is trying to offload from banks.

Hedge Fund Intelligence recently estimated total assets under management at Avenue Capital Group at $16.4 billion, King Street Capital at $15.8 billion, Fortress Investment Group at $13.7 billion, and Elliott Associates at $12.8 billion. Presumably, the portion of these portfolios devoted to toxic assets is significantly smaller. “It’s difficult to imagine why most firms would even bother to apply now,” one hedge fund manager told us.

Treasury rules also say the $10 billion limit must be comprised of commercial and residential mortgage-backed securities that are “secured directly by the actual mortgage loans, leases or other assets and not other securities.” This is another way of saying that they must be “first tier” assets, for instance collateralized debt obligations (CDOs). But what many private players instead deal in are “CDOs squared” or CDOs secured by other CDOs, which would not count toward the requirement. This, too, will make it harder to take part in the program.

It used to be Standard Oil that sucked out our lifeblood. Maybe it still is, under the guise of banking and Ne0-Liberal Capitalism. The tentacles again oppressively spread across the nation, sticking the suckers with their bigger suckers. Then there are those who pretend to vanquish the monster in the guise of government’s technocratic saviors. They are not saviors. Obama and Geithner are ever defenders of the status quo, of the ever gated community.

It sucks.

No worries, the BBC says there are already too many of us. We have exceeded the Earth’s limits

And here is another take on what we might expect from tomorrow’s G20 meeting