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The proposed Public Private Investment Partnership (PPIP) is an extension of a cozy
relationship between the government and the financial sector that was a prime contributor
to the crisis.
On March 23, 2009 the Treasury Department released details on its Public Private Investment Partnership
Program (PPIP). The key features of this program are:
- The government would contribute $75 to $100 billion to partnerships with private investors. Private
investors would contribute $400 billion.
- The partnerships would buy legacy loans from banks, allowing them to clean up their balance sheets.
- Partnerships would also buy legacy securities from banks and other financial institutions including
insurance companies, pension plans, and mutual funds.
- The Treasury would also loan money to the partnerships equal to 50% of the equity capital of the fund,
expanding their purchasing power.
- The profits from the purchase and sale of these securities would be shared by the partners (the
government and private investors).